Currently CEX’s and DEX’s holding custody over deposited assets non-segregated for end users, receive daily accrued stXXX for the staked assets, these are not distributed to the end clients, but become assets of the exchange or dex protocol.
These entities are not incentivised nor put in the ‘work’ for the ‘rewards’ essentially obtain and retain / sell without knowledge or control of the end depositor.
It would be prudent to scale down the amount of rewards paid to these entities/protocols, and redirect these rewards to the active stakers outside of these centralised or decentralised dex pools, this would increase the yield by 1-3% for the active holder, and would remove selling pressure/and or restrict protocol control via assets under their control
Swissborg 7 for example has made on 0x7153d2ef9f14a6b1bb2ed822745f65e58d836c3f -
Swissborg 4 for example has made on 0x6cf9aa65ebad7028536e353393630e2340ca6049 -
You raise a valid point about the current situation where some protocols hold custody over deposited assets and receive daily rewards for staked assets, which they may retain or sell without the knowledge or control of the end depositor.
Important fact to understand is that their users willingly delegate assets through platforms like Swissborg because of the smoother and more familiar user experience they provide. If they are fine with how the funds are used, we can’t interfere.
These platforms can help to remove the steep knowledge gap that many general DeFi users may need to overcome in order to participate in staking on their own.
Also important to consider that redirecting rewards would create selling pressure on a different side of the market. There is no perfect solution.
Would be really interesting to understand why do you feel Lido should not work with institutional type of protocols and just provide rewards to general users?
It is a tricky subject and ultimately, the choice of where to delegate assets or participate in staking directly is up to the individual user and their own research and decision.
We do our part by making sure protocols that interact with Lido are audited and satisfy the highest security standards.