Lido discontinued Solana staking in October 2023 due to financial and fee-related issues.
Around $25 million worth of Solana tokens are stuck in Lido's smart contracts due to technical complexities in the unstaking process.
Many users are having trouble unstaking their SOL due to the technical challenges.
Lido has been criticized for poor communication regarding the situation, leaving users frustrated and confused.
While the cause of the issue (related to the withdrawal function) has been identified, fixing it through Lido DAO could be a complex and slow process.
Aside from hacks, sometimes in Defi, something goes terribly wrong with a protocol somewhere, rendering millions of dollars worth of crypto lost, inaccessible or burned.
Something happened with Solana stakers and Lido recently and is a perfect instance of one of these scenarios.
As it stands, about $24 million worth of Solana is now inaccessible and possibly gone forever, after a smart contract on Lido malfunctioned.
Lido is the biggest staking service in Defi, no questions asked.
According to Defillama, the staking service has around $31.8 billion in TVL, giving it an edge over the next biggest (EigenLayer with $11 billion), three times over.
Lido ventured into Solana staking, offering users the chance to stake their Solana tokens and earn an APY of around 5%.
However, things didn’t go as planned, and the Solana staking service had to be discontinued in October 2023 due to issues with Finances and fees.
After suspending staking, the platform still offered users an alternative to take out all their staked SOL until February of this year, after which the only option would be to use Solana’s more technical command line interface (CLI).
The problem with this arrangement is that the CLI has proven to be challenging for many, with Lido’s Discord channel getting filled with messages from users who are unable to complete the process.
Millions stuck on Solana
According to data from SolScan, around 31,587 holders still have around $25,179,140 million worth of staked Solana (stSOL) locked in Lido’s smart contracts.
The technical complexity of unstaking this Solana has been challenging for the average user, leading to frustration and, in some cases, unknown errors even when following Lido’s instructions.
Terrible communication from Lido
According to a recent discord message from Pavel Pavlov, a product manager from P2P Validator, the team previously managing Lido on Solana, the difficulties users face might be linked to an issue with the smart contract’s withdrawal function.
Pavlov stated that the contract is struggling with changes in the Rent-Exempt Split logic, which streamlines the withdrawal process.
However, even though the issue has been identified, the P2P Validator admits that they have no direct control over the situation and that Lido DAO might have to be called in for a potential solution.
To add fuel to the fire, changing the smart contract involves a complex and time-consuming process, and there might not be an easy fix altogether.
Solana lost its footing around the $210 level on 18 March, showing that this level is earmarked by aggressive selling from the bears.
The crytocurrency has declined from here, eventually hitting the $177 support (where the 25-day EMA sits).
The bulls are buying the dips
As we can see above, there is an ongoing recovery with the candlestick on 3 April, indicating that the bulls are actively buying the dips.
If this momentum continues, we just might see Solana continue upwards and hit the $203 resistance again, (which happens to be where the upper Bollinger band sits.
We can keep an eye out for $177 and hope that we do not see a break below, while Solana makes another attempt at retesting $203.
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