191 - Danny Ryan's Case Against Lido

Does this present a systemic risk to Ethereum?
Oct 6, 20232 min read

Danny Ryan is a coordinator at the Ethereum Foundation. He’s been on Bankless many times before. Usually, we’re talking about the Ethereum roadmap and what’s coming next. This time we’re talking about something different…a risk to Ethereum that Danny sees. A little over a year ago, Danny wrote a blog post titled “The Risk of LSDs”... discussing the various risk vectors that a dominant LSD presents to Ethereum…even naming Lido specifically in the process.

A lot of people have decided that liquid staking with Lido is the place to do it. At the time of recording Lido has over 30% of all staked Ether. Does this present a systemic risk to Ethereum?

We did an episode called, “In Defense of Lido” with researcher Hasu who argued that Lido does not pose a systemic risk to Ethereum. In fact, Lido’s dominance is better than many other alternatives. We left that conversation half-finished when we published it in August 2023.

In today’s episode, we cover part two of that debate with Ethereum researcher and guest Danny Ryan who argues the opposite. Lido is a systemic risk to Ethereum and what to do about it.

We believe our role as podcasters for issues like this is to voice both sides of the argument in long-form conversations and healthy debate. It is exactly the kind of thing you don’t get on Twitter. That’s why we’ve given voice to both sides of this issue.

We think there are good actors who care about this ecosystem at Lido and in the broader Ethereum community and we’re sure this episode won’t be the last word on this subject.


0:00 Intro

7:41 Is Lido a Threat to Ethereum

8:57 Blog Post Thinking Change?

19:30 Uniswap

21:20 Theoretical Main Risks

25:45 God Mode

27:20 Practical Main Risks

34:00 Hasu Counter-Arguments

38:25 Permissionless Validator Set Mitigation

42:30 Veto Power Mitigation Argument

46:55 How Likely is the Lido Risk?

51:26 Client Team Positioning

55:00 How Special is the Lido Case?

57:45 One LST Inevitability

1:02:30 Solutions

1:06:55 Profit Maximization

1:09:00 Action Steps For Ethereum Decentralization

1:11:53 Can Ethereum Devs Do Something?

1:20:10 Hasu Questions Answered by Danny

1:22:45 Magnitude of the Lido Threat

1:24:20 How Can Lido Fix This?

1:25:59 Stick & Carrot for Lido

1:26:27 Silverlining of Lido Threat

1:29:05 Next Conversations

1:32:16 Closing & Disclaimers


Danny Ryan


Danny Ryan Blog Post


Hasu’s Bankless Interview


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