Not long ago, we learned of a security incident involving Lido, the world’s largest provider of liquid staking for Ether (ETH). It is particularly worrying any time that a security breach occurs. Before you start panic selling, it’s important to understand just how serious this breach is and what Lido is doing to protect user funds. We’re writing this primer in hopes of giving you a more complete and comforting picture of what’s happening.

Understanding the Lido Hack

Early in the Lido hack, the amount lost was around 1.4 ETH. For clarity’s sake, it’s very important to highlight that this loss was not charged to user funds staked on the platform. Although the breach affected only one part of Lido’s infrastructure, the security of the underlying staking mechanism was not compromised.

Lido Staked Ether (stETH) is an Ethereum-based cryptocurrency token that’s pegged 1:1 to Ether (ETH) tokens staked through the Lido staking protocol. To incentivize users to stake their ETH on Lido, they issue stETH in return. Each stETH token collects staking rewards daily. This is true regardless of where or how you originally obtained it, such as by staking directly, a DEX, etc. In the past, the yield on stETH has been around 3–4% APR. That’s because the market price of stETH is pegged to the price of ETH. This trend is incredibly countercyclical and builds the perpetuity premium in investors’ confidence in the protocol.

Instead, Lido runs a complicated system with 80+ smart contracts, orcode and other interlinked components. As such, vulnerabilities can, unfortunately, arise. To prevent these risks, Lido has implemented robust security protocols to address them. The recent incident is a reminder that these safety protocols work to avert often catastrophic widespread damage.

Why User Funds Remained Safe

Several factors contributed to this outcome:

  • Isolation of the Breach: The vulnerability was contained within a specific area of Lido's infrastructure, preventing it from spreading to the core staking contracts.
  • Multi-Layered Security: Lido employs multiple layers of security, including audits, bug bounty programs, and continuous monitoring, to detect and prevent attacks.
  • Rapid Response: Lido's team responded quickly to the incident, identifying the vulnerability and implementing a fix before it could cause further damage.

For example, Lido operates large bug bounty programs. Even more recent are their smart contract bug bounty rewards—up to $2 million for anyone who finds a vulnerability. This proactive approach incentivizes white hat hackers by giving them the opportunity to discover and report problems before they’re put into production or can be exploited.

Lido's Security Measures and Future Prevention

As always, Lido is dedicated to the highest possible security standards. In light of the recent incident, the platform is going even further to increase its security posture. These measures include:

  • Enhanced Monitoring: Implementing more comprehensive monitoring systems to detect anomalies and suspicious activity.
  • Increased Audits: Conducting more frequent and thorough audits of its smart contracts and infrastructure.
  • Security Training: Providing additional security training to its development team to improve their awareness of potential vulnerabilities.

Lido understands that security is a continuous journey. To that end, they are dedicated to an ongoing process of developing their defenses as new threats emerge.

Potential Risks Associated with Lido

While Lido offers a convenient way to stake ETH, it's important to be aware of the potential risks involved:

  • stETH Withdrawal Delays: During periods of high network congestion, withdrawals of stETH may experience delays.
  • Slashing Penalties: If the validators that Lido uses to stake ETH act maliciously or make mistakes, stakers may incur slashing penalties.
  • Smart Contract Vulnerabilities: As with any smart contract-based platform, there is a risk of vulnerabilities being exploited.
  • Depegging Risks: There is a risk that the price of stETH could deviate from the price of ETH, leading to losses for stakers.

Additional Risks to Consider

Beyond the general risks associated with staking, Lido stakers should be aware of:

  • Liquidity Risks: The liquidity of stETH on decentralized exchanges can fluctuate, which may affect the ability to buy or sell stETH at a desired price.
  • Lido Fee Structure: Lido charges a fee on staking rewards, which can impact the overall profitability of staking.
  • Smart Contract Vulnerabilities: While Lido has undergone numerous audits, smart contract vulnerabilities can still exist and could be exploited.

A Balanced Perspective

While there’s promise with smart contracts, it’s important to evaluate the risks associated with them as well. Although the Lido hack is a deeply concerning event, it does remind us that security should always be at the forefront when operating in the cryptocurrency space. It does show how well Lido’s security protocols worked to ensure that widespread damage didn’t occur.

Not 1.4 ETH, so that’s disappointing. Even that amount is relatively tiny compared to all of the total value locked (TVL) on the Lido platform. Ever since, Lido’s TVL has exploded. It exploded from just around $15.4 billion at the beginning of 2021 to over $38.5 billion by December 2024. This serves to emphasize the platform’s resilience as a whole as well as the confidence that users have in the security Kraken provides them.

Do your own research before staking ETH with Lido or any other provider. Identifying the risks Assessment of risk is one of the most important concepts in any investment. The extraordinary nature of the recent incident means we shouldn’t let this sow panic. It proves that Lido’s security measures are able to protect user funds from malicious actors.

Understanding 'Idle Mine': A Free Game That Rewards You with Bitcoin

The Lido hack is not a minor concern. Don’t lose sight of the positive momentum developing in the more expansive crypto ecosystem! One of these innovations is the increasing popularity of videogames that pay players in Bitcoin.

Overview of 'Idle Mine' and Its Features

‘Idle Mine’ is a free-to-play idle game in which users can earn Bitcoin by mining resources in a virtual world. This is a game that is meant to be hugely accessible, since everyone will have their own level of technical comfort. It means that players can earn Bitcoin passively, even when they’re not actively playing the game.

Just download the game from any app store, sign up for an account, and go start your mining journey. In addition to the NFT, players can boost their earning potential by leveling up their mining rigs and finishing missions.

  • Simple gameplay mechanics
  • Passive income opportunities
  • A variety of upgrades and enhancements
  • A vibrant community of players

How to Get Started with the Game

Understanding the ever-changing world of taxes can be daunting, especially when it comes to crypto in the United States. Follow the looming new rule-making as we march toward 2025. Knowing how these developments could impact your crypto portfolio will be key.

Key Insights on US Crypto Taxes for 2025

From that day forward, the IRS has been hard at work to clarify the tax treatment of cryptocurrencies. Some key regulations to keep in mind include:

Important Tax Regulations to Consider

So understanding how these regulations apply to investors in cryptocurrency is absolutely critical. Failure to follow all tax regulations can lead to costly penalties and accruing interest. We highly recommend you speak to a tax professional to make sure you’re on top of your taxes and not inadvertently coming into liability.

  • Capital Gains Tax: Profits from selling, trading, or exchanging cryptocurrencies are generally subject to capital gains tax.
  • Income Tax: Cryptocurrency earned through mining, staking, or as payment for services is typically treated as ordinary income.
  • Reporting Requirements: The IRS requires taxpayers to report all cryptocurrency transactions on their tax returns.

Implications for Cryptocurrency Investors

The crypto market never sleeps, and neither do the people working to make new developments available every day. Here are some recent highlights:

Recent Developments in the Cryptocurrency Market

According to recent news reports, crypto-related power theft has exploded in Malaysia. These illegal mining operations are allegedly picking energy off the power grid without consent, costing utility providers millions in losses.

Significant Rise in Crypto-Linked Power Theft in Malaysia

The introduction of US Bitcoin futures and the constant talks in the US government related to regulations of cryptocurrency are having a major impact on market prices. Collectively these forces are creating a perfect storm – both increased volatility and increased investor demand for the crypto space.

Impact of US Futures and Government Talks on Crypto Prices

The regulatory framework for cryptocurrencies is at a critical inflection point as well. Here are a couple of noteworthy updates:

Legislative and Legal Updates in the Crypto Space

Just last month, many of the same states rejected similar proposed legislation that would have permitted them to hold Bitcoin as part of their state treasury reserves. These decisions mirror different views on the benefits versus risks of adding Bitcoin to state coffers.

States That Have Rejected Bitcoin Reserve Bills

Legal actions against crypto founders and investors continue to bubble up in the news. When such cases do occur, they typically involve serious allegations of fraud, securities and other violations and misconduct.

Legal Actions Involving Crypto Founders and Investors

Here are some recent observations:

Market Trends and Price Movements in Cryptocurrency

Dogecoin, the quintessential meme coin, has recently sent crypto markets skyward. At the same time, Bitcoin accomplished a landmark new price milestone, underscoring its ongoing dominance in the crypto market.

Dogecoin's Recent Surge and Bitcoin's Price Milestone

Security and regulatory actions are having a larger impact on the direction of the crypto industry these days. Here are some recent examples:

Factors Contributing to Bitcoin's Price Increase

Law enforcement agencies have made arrests in connection with major crypto scams, signaling a crackdown on fraudulent activities in the space.

  • Increased institutional adoption
  • Growing mainstream awareness
  • Limited supply

Security and Regulatory Actions in the Crypto Industry

Law enforcement has begun to seize assets from these liquidated crypto exchanges in an effort to recoup cash for victims of malfeasance.

Arrests in Major Crypto Scam Investigations

Even with all these obstacles, the cryptocurrency sector remains a bright source of innovation with new and creative products and services coming to market. Here are a couple of examples:

Asset Seizures from Shuttered Crypto Exchanges

Coinbase, one of the largest exchanges launching Bitcoin and Ethereum Futures trading since cryptocurrencies inception. This significant new feature provides users much more flexibility and access to these growing markets.

Innovations and New Offerings in Cryptocurrency

Steak ‘N Shake, a popular restaurant chain, has introduced Bitcoin payments nationwide, demonstrating the growing acceptance of cryptocurrency as a form of payment.

Coinbase Launches 24/7 Bitcoin and Ethereum Futures Trading

Coinbase, a leading cryptocurrency exchange, has launched 24/7 Bitcoin and Ethereum futures trading, providing users with greater flexibility and access to these markets.

Steak ‘N Shake Introduces Bitcoin Payments Nationwide

Steak ‘N Shake, a popular restaurant chain, has introduced Bitcoin payments nationwide, demonstrating the growing acceptance of cryptocurrency as a form of payment.