Lido’s Earn Tab Redefines Safe DeFi Access for Stakers

Lido has introduced Earn, a new interface feature on stake.lido.fi that showcases curated DeFi strategy vaults, aiming to simplify and enhance the security of staked ether usage. The initiative reflects Lido’s broader effort to integrate user-friendly and risk-mitigated options for its community of stakers. Lido's Earn tab is designed to streamline access to DeFi strategies without compromising on safety protocols. To qualify for listing, vaults must adhere to the same rigorous security standards as the core Lido protocol, which includes audits by reputable firms and addressing any critical vulnerabilities identified during the review process [1].

The first vault available through Earn is the GG Vault (GGV), developed by Veda Labs. This vault provides a one-click access to blue-chip DeFi strategies, allowing users to utilize ETH, WETH, stETH, or wstETH. For the GGV, Lido has established a 1% platform fee that is shared between Veda and the Lido DAO, a structure common in the DeFi space. This transparent fee model aims to align incentives between the developers and the broader community. Users depositing into these vaults receive an ERC-20 token that accrues value over time, functioning similarly to wstETH, the non-rebasing version of stETH widely used in DeFi [1].

The second vault under the Earn initiative, the Decentralised Validator Vault (DVV), is set to launch in mid-September and is being developed by Mellow. The DVV leverages Mellow’s modular architecture to enhance validator decentralization. Each strategy is encapsulated within an isolated “Subvault,” designed to operate independently with clearly defined parameters to prevent unintended interactions. Control over these Subvaults is shared via a 5-of-8 multisig between Mellow and Lido, ensuring a balanced governance model. This design not only enhances security but also provides transparency in the management and execution of DeFi strategies [1].

Redemption processes within the DVV are structured to resist manipulation. Price reporting and redemption are handled in batches, with each batch receiving the same fixed price at the time of the oracle report. Liquidity settlement can be configured between one day and two weeks, depending on the specific needs of the users. This approach minimizes the risk of market manipulation and ensures a fair treatment of all users, regardless of their position size or access level. The use of MPC (Multi-Party Computation) in asset custody through Copper’s ClearLoop integration further safeguards against rehypothecation and unauthorized access to private keys [1].

Both the GG Vault and the Decentralised Validator Vault are designed to meet Lido’s core design principles, particularly the 'no harm to stETH users’ constraint. This ensures that the introduction of new strategies does not negatively impact the existing ecosystem or the value proposition of stETH. The upcoming launch of the DVV is expected to expand the range of options available to Lido users, enabling them to participate in validator yields with additional layers of safety and simplicity. These developments underscore Lido's commitment to innovation and user experience in the DeFi landscape [1].

Source: [1] Lido debuts simplified Earn vaults with Veda and Mellow (https://blockworks.co/news/lido-earn-tab)