Lido to distribute LDO rewards via Aave v3 liquidity pools

• Lido DAO community has approved by over 99% of vote to allow for staking rewards distribution across Aave v3 liduidity pools.
• LDO rewards will now be distributed across Ethereum, Arbitrum and Optimism blockchains.
• Users earn rewards when they stake Ethereum (ETH) on Lido.

Lido, the liquid staking protocol for Proof-of-Stake (PoS) coins, will now distribute staking rewards in LDO,  the native LidoDAO token through three major Aave v3 liquidity pools.

The distribution across Aave v3 is for staked Ether (stETH) liquidity pools across Ethereum, Arbitrum and Optimism.

Aave v3 to distribute Lido staking rewards

The news follows a community vote on an LDO rewards distribution proposal, which garnered 99% of the support. With this development, every LDO “emission admin” on the three blockchain networks will have access to a wallet that’s controlled by Lido.

Aave, which offers a smart contracts-enabled non-custodial liquidity protocol, recently deployed its v3 on Ethereum. The DeFi platform had already launched the Aave v3 protocol on layer-2 blockchains Arbitrum and Optimism.

In 2022, Lido DAO announced it would offer stETH rewards to liquidity providers on both Arbitrum and Optimism as part of the effort to spur further adoption of the staking protocol. 

Lido users can stake any amount of ETH and earn daily rewards, with LDO then allowing users to participate across the DeFi ecosystem even as their staked ETH remains locked. Notably, Ethereum will allow the withdrawal of staked ETH after its upcoming network upgrade dubbed “Shanghai.” The hard fork is expected in early March this year.

Between 30 Januaryand 6 February, 2023, the amount of ETH staked on Lido surpassed 5.05 million, with over 1.95 million LDO rewards already live in February. According to the Lido team, this follows a spike in new lending pools on Ethereum.