General Thoughts
At the launch of wstETH on Polygon, a key value proposition for deploying was the foundation’s incentives to bridge cross-chain (Source). From a perspective of past precedent, the lack of foundation support for DeFi on Solana, and stSol’s shrinking market share relative to competitors contributed to the phasing out of Solana wstETH.
Applying that knowledge here, and assuming the below chart of staked MATIC (dba POL) is accurate, Lido’s market share, depicted by the pink line, has been steadily decreasing throughout 2024. Compounding stMatic’s contraction, rewards for stMatic are fully depleted.
Questions
As a result, the primary question becomes: At the current market share is it economically sustainable to continue provisioning for the middleware?
A tangentially important question that should be equally weighted: what is the opportunity cost of pursuing a tail market for Lido when one of its primary directives is to increase stETH dominance (Goose 1)?
Sentiment Of Blockworks Advisory
Assuming the answer to question one is no and the answer to question two is too high, then we’d be in favor of sunsetting to refocus Lido’s efforts on Polygon towards the currently successful wstETH bridge.