[LEGO] Supercharge cheap, private staking with Lido on Aztec

[lisaaztec]

TLDR: Aztec is requesting a $10,000 grant to offer users cheap and private deposits into Lido via our zkrollup. This integration will provide users with 75-97% gas savings and fuel adoption of Lido and stETH on L2.

Background

Depositing to Lido is expensive and many users have been priced out, limiting the potential growth of the protocol’s users and TVL. At the same time, the utility of stETH is largely driven by protocol contracts on mainnet.

Users who are looking for cheaper alternatives are depositing funds into L2s and doing more transactions via rollups, which can bundle and compress transactions and amortize transaction costs across users.

However, the transition isn’t as simple for the protocols themselves. Protocols have to redeploy contracts, rebuild liquidity, and, in Lido’s case, establish liquidity mining programs to maintain the 1:1 ETH/stETH peg.

Aztec is offering an alternative that provides users with up to 75-97% gas savings versus mainnet without needing to redeploy contracts or rebuild liquidity. Users will also be able to use their stETH across Aztec via integrations with Curve, Element, and Yearn.

Gas savings provided via Aztec rollup

• assumes 102,000 gas limit for Lido deposit with $2,500/ETH and 100 gwei

How it works

Users will deposit ETH into Aztec and initiate the Lido deposit via zk.money. Aztec’s zkrollup will batch transactions across users and interact with Lido’s L1 contract via a bridge contract. Users will receive stETH, which can be used across other DeFi protocols on Aztec.

Through the Aztec Grants Program, we funded the development of the Lido integration and will integrate Lido into our frontend, zk.money, once it has been audited by Solidified. There is no additional work needed by the Lido dev team. Aztec will promote the Lido integration to the 45,000+ zk.money users and cross promote to Lido users.

Grant request

Aztec is requesting a $10,000 grant to subsidize user deposits to Lido via L2. This subsidy will simulate the gas savings that will benefit users when the rollup is full and the gas cost associated with the rollup. Aztec will also be joining the Lido referral program and will direct rewards to drive transaction costs down even further.

We believe this partnership will kickstart wider adoption of Lido by users who have been priced out and introduce the concept of private staking. This budget can substantially improve the user experience when minting stETH on Aztec and accelerate the adoption of other DeFi integrations that use stETH on Aztec. We’re happy to answer questions about the proposal and integration.

[jbeezy]

This grant was approved internally by LEGO due to the smaller size of the ask. The post is to maintain transparency around the grant process.

Lido is actively researching a number of ways to reduce cost for both the protocol as well as end users priced off of ETH mainnet. We think the proposed solution by Aztec could be helpful in that regard and will provide updates as launch gets closer.

[YawnyLion]

Sounds great! I’ve been waiting for something like this. A couple questions: 1. Will users be able to deposit and shield stETH they already hold at ZK.money (like ETH/DAI now)? 2. Will shielded stETH balance at ZK.money accrue/inflate daily? If not, how/when do users see stake reward progress?

[lisaaztec]

Thanks @YawnyLion!

1. Yes, you will be able to deposit and shield stETH you already have and use across other dapps privately and cheaply.
2. That’s a great question. I believe yes, but I’m confirming with the frontend (zk.money) team and will revert back.

[vsh]

Love the initiative. Second the question for supporting the rebase mechanisms.

[lisaaztec]

Hi @YawnyLion ! I have a quick clarification.

Technically the asset that would be deposited to Aztec is wrapped stETH, as outlined here. TLDR is that no rollups can support rebasing tokens, so you’d need to wrap it before depositing it.

As to whether you can deposit wstETH on zk.money, the short answer is yes, but not immediately at launch. In the first few months after launch we plan to add more bridges that enable you to use wstETH and as the privacy set grows around wstETH, we will enable deposits. Also by then, we’ll have a revised SDK so you can build interfaces to deposit and earn yield on wstETH via Aztec.

As to your second question - the wstETH balance you’ll see in Aztec will not be changing (since the wrapped asset doesn’t rebase), but the underlying stETH tokens will be changing. You won’t see the progress, but it’ll happen in the background.

[Callen]

Great proposal Lisa! Nice to see Aztec in the Lido forums.

[katernoir]

Really excited about this initiative! Sounds like a very good way to enable more users to use stETH/wstETH!