Lidos’ wrapped staked ETH is coming to Cosmos
Lido DAO will govern bridging contracts following the initial bridging implementation of wstETH onto Cosmos
Maurice NORBERT/Shutterstock modified by Blockworks
Lido, the liquid staking protocol, will bring its wrapped liquid-staked ETH (wstETH) to the Cosmos ecosystem in a partnership with Axelar and Neutron.
Sergey Gorbunov, co-founder of Axelar, noted that this partnership will mark one of the biggest cross-chain expansions of the largest liquid staking tokens and will be achieved via Squid, a cross-chain liquidity routing and swap protocol on the Axelar network.
Squid protocol recently announced that it would enable one-click cross-chain swaps on Cosmos.
“Through Squid’s cross-chain liquidity router we can optimize asset bridging, significantly speeding secure deposits, presenting a different experience from the lengthy delays required for current bridged deployments,” Gorbunov said in a statement.
This is the first time Lido will not use native chain bridges to bring its liquid staking tokens across ecosystems.
Historically, Lido has worked with canonical bridges to bring their assets across chains, according to Avril Dutheil, co-founder of Neutron.
“This is because these [canonical] bridges have interesting properties from a perspective of trustlessness, but when bridging to ecosystems such as Cosmos, it’s a lot trickier to get the same properties because most of these emerging technologies introduce additional trust assumptions,” Dutheil said.
Even though it is possible to bring wstETH to Cosmos today, as Cosmos itself is a network of different layer-1 blockchains, the staked tokens will all belong to different denominations, Dutheil explained.
What the team at Neutron has developed is a wrapper contract designed to ensure that bridging components are unified.
“The goal is to basically lock in the denomination so that the ecosystem has a unified token to represent the wrapped assets,” he said. “To improve and upgrade this implementation over time, we want to be able to update the contract and add other bridge providers to eventually build it into a bridge agnostic solution that becomes more secure.”
Following the initial bridging implementation of wstETH onto Cosmos, Axelar and Neutron will hand administration and management of the bridge to the Lido DAO, which will govern the bridge contracts on the Neutron network.
The DAO will be responsible for determining if further security upgrades and bridging solutions need to be added.
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