Lido Becomes Second Heaviest Component on Grayscale DeFi Fund

Cryptocurrency asset management company Grayscale has brought in the native token of staking protocol Lido DAO (LDO) as its second heaviest component in its Decentralized Finance (DeFi) fund. 

Grayscale Adjust Fund Portfolio to Fit Lido

According to the updated Fund Component weightings, LDO takes up 19.04% of the entire fund following Uniswap (UNI) which is at 45.46%. 

Other tokens in the Grayscale DeFi fund and their weight are Aave (AAVE) at 11.53%, MakerDAO (MKR) at 10.82%, Curve DAO Token (CRV) at 7.03% and Synthetix (SNX) at 6.12%.

The addition of LDO Was possible after Grayscale “adjusted the DeFi Fund’s portfolio by selling certain amounts of the existing Fund Components in proportion to their respective weightings”. 

The proceeds from these sales were redirected into acquiring LDO. Markedly, no token was removed from the Grayscale DeFi fund.

Lido’s Liquid Staking Benefits

Lido is a decentralized liquid staking service that offers a token known as LDO. In other words, the LDO is created and transmitted through the operations of the decentralized Lido protocol, and it permits the liquid use of staked tokens on Proof-of-Stake (PoS) blockchain networks. Ordinarily, certain tokens which are staked to support the security of a PoS blockchain nnetwork, are locked while they accumulate staking rewards.

At this point, they can not be bought, sold, transferred it even used for any purpose until the tokens are finally unstaked. Assets which have been staked to support the security of their respective PoS networks are represented by stToken.

Users Permitted to Buy And Sell Staked Tokens

With Lido protocol, however, stToken are now buyable, sellable, transferable, or useable.

“Staking rewards related to the underlying staked tokens that accumulate to the Lido protocol are re-staked while existing stToken holders receive newly minted stTokens to ensure the holders’ balances of the related stToken increase proportionately to maintain their stTokens’ one-to-one representation with the underlying asset,” per the published statement.

Similarly, MetaMask integrated Lido and Rocket Pool to provide liquid staking services on the popular crypto wallet. The integration gave users the permission to stake their ETH directly from the app.