Most of the time, investors are not just investing in a project; they are also investing in its management. If investors believe in a project’s management, they will likely invest more.

Recently, an incident occurred that improved investors’ confidence in Lido DAO, but before we get into that, let’s briefly discuss Lido and Lido DAO.

What is Lido?

Lido is primarily a liquid staking solution for Ethereum and Polygon. Products offered include liquid staking derivative token contracts and other auxiliary smart contract infrastructure to support native token staking services.

Lido’s smart contracts empower users to stake ETH on Ethereum and ERC-20 MATIC on Ethereum, earning the corresponding liquid staking derivative token (aka st[token]). Lido's liquid staking service allows users to harness the benefits of staking rewards without compromising their tokens' liquidity.

Lido is a platform that encourages users to make the most of their staked assets, supporting a variety of Proof-Of-Stake (PoS) consensus mechanisms. In essence, Lido’s staking solutions are designed for users who, due to economic or technical constraints, are unable to operate a validator themselves.

The platform offers a liquid staking solution that provides users with a system for earning rewards on staked coins while also receiving a tokenized version of the staked coins, which can generate returns in other DeFi protocols.

What is Lido DAO?

Lido DAO, an innovative decentralized autonomous organization co-founded by Kasper Rasmussen and Jordan Fish, offers a liquid staking solution on the Ethereum 2.0 blockchain and Polygon (MATIC).

Lido DAO allows users to liquefy their holdings and use them for other protocols (liquid staking). Through this yield-generating process, users are able to receive a tokenized version of their staked tokens on a 1:1 basis. Lido DAO is what keeps Lido ticking.

Lido DAO has a governance process that involves a discussion phase, snapshot, and on-chain voting. This is how decisions are made within the organization.

Since Lido’s birth in December 2020, shortly after ETH 2.0's release, Lido DAO has gained an impressive reputation for its liquid staking capabilities and now boasts over $34 billion in staked assets. Lido DAO sets itself apart from many other liquid staking protocols due to its decentralized nature and attractive annual percentage rates (APR). The platform offers 3.3% and 4.2% APR for staking ETH and MATIC, respectively.

Lido DAO’s Crisis Management

At the time of writing, the token price of Lido DAO (LDO) is $2.45, up 19.25% in the last seven days. This is due to the quick resolution of a security incident affecting one of Lido DAO’s Node Operators, Numic.

Numic is one of the node operators collaborating with Lido on the Ethereum protocol. On May 14th, it was discovered that a developer machine utilized by Numic had been breached. Stakeholders feared that the encrypted key material backups of the mainnet validators may have been hacked; however, no evidence was found of any manipulation with the encryption or suspicious use of the keys.

Numic immediately responded by erasing all depositable keys to zero and systematically removing any keys that may have been compromised. Because of this, other validators that could have been hacked were unable to receive fresh deposits.

DAO contributors were vital in Numic’s ability to examine the breach thoroughly. They worked together to keep the community’s faith in one another and ensure that everyone was kept in the loop. There were no monetary losses, and the validators’ activities were unaffected by the successful implementation of the precautionary measures.

Conclusion

The price of LDO surged during this time. This rebound reflects investor confidence in Lido DAO’s ability to manage crisis circumstances. Because of this incident, investors feel more secure about the project because they now know how the DAO behaves in periods of uncertainty. Effectively, investors trust Lido DAO more now than they did before.