Andreessen Horowitz brings $70M to Ethereum staking solution Lido Finance

The venture capital firm Andreessen Horowitz has invested $70 million in Staking protocol for Ethereum Lido Finance, marking the protocol’s first investment round since May 2021.

According to a representative for Andreessen Horowitz, the venture capital firm’s investment in Lido is designed to help accelerate the adoption of decentralized staking solutions for Ethereum 2.0. With the implementation of proof-of-stake (PoS) and other upgrades, Ethereum 2.0 signals a substantial shift in the network’s consensus method, potentially improving scalability and lowering fees. The switch to Ethereum 2.0, which started in November 2020, is still in progress.

Excited to share that @a16z has invested $70M in @LidoFinance, one of the easiest ways to stake ETH and other PoS assets, and we used Lido to stake a portion of our ETH holdings on the Beacon chain. More from @DarenMatsuoka & @_PorterSmith: https://t.co/vc2tzDJ3mS

— cdixon.eth (@cdixon) March 3, 2022

According to Andreessen, staking Ether (ETH) presents considerable barriers given the high threshold for running a node. Users must be able to stake at least 32 ETH, which is worth over $90,000 at current pricing, to become full validators.

Andreessen went on to reveal that it is staking a portion of its ETH holdings on the BNB Beacon Chain using the protocol, in addition to investing in Lido. The venture business claims that “staking with Lido removes many of the operational complexities that institutional investors have faced.”

Ethereum witnesses high staking

According to industry data, Ethereum’s BNB Beacon Chain recently registered its 300,000th validator. Nearly 9.7 million ETH have been staked at the time of writing, for a total value of $27.1 billion.

Despite the fact that phrases like Ethereum 2.0 and Eth2 are still commonly used in the industry, the Ethereum Foundation declared that it would stop using them in January. The original ETH blockchain is now referred to as the “execution layer,” while the PoS chain is now referred to as the “consensus layer.”

Lido Finance, which was founded in 2020, is a liquid staking solution for Ethereum 2.0 that allows customers to stake their ETH with no lockups or minimum deposits. Lido also supports additional coins and has recently introduced Polkadot’s wild cousin Kusama liquid staking.

In May 2021, Lido completed a $73 million fundraising round sponsored by crypto venture capital firm Paradigm. Alameda Research, Three Arrows Capital, Digital Currency Group, and Alameda Research also participated in the funding round.