Lido Discontinues Staking Operations on Polygon Network After Strategic Decision

Lido, the liquid staking protocol, announced the termination of its staking operations on the Polygon network following a strategic decision driven by

Liquid staking protocol Lido is set to discontinue its staking operations on the Polygon network after a strategic decision influenced by limited user adoption and evolving market conditions within the DeFi space.

The decision follows a vote by Lido DAO Token (LDO) holders in November, where 99% approved the move. Two proposals were considered in the vote: transitioning away from Polygon or reevaluating the economics of middleware services.

In a blog post dated December 16, the Lido team explained the rationale behind the decision, highlighting the scalability challenges and resource-heavy maintenance requirements they faced on Polygon.

As decentralized finance (DeFi) dynamics shifted, Lido encountered difficulties operating on the Polygon network. The emergence of zkEVM solutions led to declining demand for liquid staking services on Polygon's proof-of-stake (PoS) network.

In their statement, the Lido team also noted the presence of alternative liquid staking protocols within the ecosystem that garnered attention, making Polygon's market smaller than initially anticipated.

Shard Labs, the entity that introduced Lido's staking service to Polygon in 2021, also commented on the matter. They pointed to the DeFi sector's migration towards zkEVM technologies, which reduced Polygon PoS's role as a critical infrastructure component.

This transition resulted in lower demand for liquid staking solutions on Polygon PoS, impacting Lido on Polygon's potential as a foundational DeFi building block.

Staking requests on Lido for Polygon were officially discontinued on December 16. However, users can still withdraw their staked MATIC tokens via the Lido interface until June 16, 2025. Withdrawals will be temporarily suspended from January 15 to January 22, 2025.

After June 16, Lido will end front-end support, leaving users to rely on browser tools for processing withdrawals.

The gradual wind-down ensures users have sufficient time to retrieve their assets, but all staking rewards have already ceased as part of the decommissioning process.

Following the announcement, POL, the native token of the Polygon network, experienced a 1.41% decline over 24 hours, trading at $0.59. The token's market capitalization now stands at $4.94 billion.

The POL/USDT pair exhibits a bearish trend. The token is trading below critical resistance at $0.6104, aligned with the 100-day EMA. Analysts observe significant selling pressure around the $0.6135 mark, coinciding with the 50-day EMA.

The POL token recently tested a support level of $0.5468. At the same time, the RSI indicator hovers at 44.84, signaling weak momentum and limited bullish activity.

Failure to break the $0.6100 resistance could see POL revisit the $0.5468 threshold, adding to short-term concerns.

Despite its earlier high of $1.2713 in March 2024, POL continues to struggle below the $0.80 resistance, casting doubts over its recovery potential. A sustained push above $0.6100 could pave the way for modest gains, potentially targeting $0.6517 or higher.