Investing in Lido | Andreessen Horowitz

Ethereum’s upcoming transition from proof-of-work (pow) to proof-of-stake (pos) has the potential for cascading effects across the crypto landscape.

Instead of using computational resources to secure the network, anyone will be able to stake their eth and operate block production validators, drastically reducing energy consumption. Ethereum transaction fees and inflation-driven rewards will be distributed to more network participants, expanding access to economic opportunities within the Ethereum ecosystem.

Reading: Lido ethereum 70m andreessen horowitz 76k

However, eth staking has significant barriers today. perhaps most notably, a minimum of 32-eth is required to operate a node. this only prevents a significant number of network users from running their own validator, and there is no native method of delegating one’s share to circumvent these minimum capital requirements. furthermore, staking on the beacon chain today is a one-way transaction: it effectively locks eth until the transition from pow to pos, resulting in a high opportunity cost of capital given the abundance of yield-generating alternatives that exist in defi .

Due to these challenges, centralized exchanges have become better positioned to offer staking services due to efficiency of scale. companies like binance, kraken, and coinbase can easily pool their users’ assets (removing minimum capital requirements), stake on their behalf (removing the operational burden), and issue a liquid market for this staked asset (unlocking liquidity and allowing users to users to switch back from staked eth to eth). these services are valuable to their users, creating a great opportunity for a decentralized alternative.

See also: Ethereum vs Solana vs Cardano vs Polkadot: The Rivals of ETH – Phemex Academy

That’s why we’re excited to invest in lido, a powerful decentralized engagement platform. offers one of the easiest ways to stake eth and other pos assets today, while striving for decentralization through dao governance. lido democratizes staking.

The lido community’s unwavering commitment to decentralization really caught our attention. they recognize that for their approach to be successful, they will need to create a totally trust-free stakeholder group while adopting alternative solutions.

finally, lido solves the competitive incentives between staking and seeking profitability in defi. By issuing a native ethereum liquid token, lido allows you to use eth staked as collateral within defi in the same way you can use eth today.

We actively contribute to our portfolio networks and communities, so in addition to our investment in lido, we stake a portion of a16z crypto’s eth holdings on the beacon chain. Lido betting removes many of the logistical complexities institutional investors have faced.

See also: 2 Trending Cryptos to Ride to the Moon (and 2 to Jettison) | InvestorPlace

We look forward to supporting the lido community on their long journey ahead. There will be competitive incentives even after the post transition between securing the ethereum network through staking and alternatively seeking higher returns by participating in defi. We will contribute, both as a stakeholder and as a governance participant, to help ensure a fair, transparent and credible ecosystem of participation.

We want a world where a diverse set of centralized staking services, decentralized staking pools, and individual validators play a role in the security of ethereum. We’re excited to work with lido as we collectively build toward this future.


Opinions expressed herein are those of the individual AH Capital Management, L.L.C. (“a16z”) quoted staff and are not the views of a16z or its affiliates. Certain information contained herein has been obtained from third party sources, including portfolio companies of funds managed by a16z. Although taken from sources believed to be reliable, such information has not been independently verified by a16z and makes no representations as to the enduring accuracy of the information or its suitability for any particular situation. In addition, this content may include advertisements from third parties; a16z has not reviewed such advertisements and does not endorse any advertising content contained within them.

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