After the SEC's Crackdown on Kraken, the Biggest Crypto Staker Warns on DeFi Challenges.

One of the men behind Lido Finance, the largest DeFi application for staking bitcoin, cautioned that service providers like Lido face a new spectrum of repercussions as a result of the SEC's crackdown on the industry.

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Jacob Blish, the head of business development at decentralized autonomous organization (DAO) that operates Lido Finance, stated, "I've been receiving a lot more queries about 'how does this affect Lido and what are your opinions on it?'" "In my opinion, this is a net positive for on-chain permissionless liquid staking or staking services, but it depends on the ultimate decision."

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According to blockchain data company Nansen statistics, Lido Finance has more than 4,8 million Ether invested on the platform, with an estimated value of $7,2 billion. Thursday, Kraken and the SEC reached a settlement over charges that the exchange's staking service constituted an unlawful sale of securities.

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Through the use of automated protocols, DeFi applications enable individuals to trade, lend, and borrow without the need for middlemen and frequently in an anonymous manner. Numerous members of the DeFi community contend that the applications' autonomous nature violates regulatory requirements because no one directly benefits.

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Blish said, "then we have a new problem" if U.S. regulators conclude that no U.S. citizen may interact with any staking service.

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Staking is the process of collecting rewards by locking up money to facilitate transactions on blockchains like Ethereum. Coinbase Global Inc., Kraken, Binance, and other centralized exchanges have introduced staking solutions to diversify revenue. The introduction of Lido Finance occurred in December 2020. Coinbase Ventures and Andreessen Horowitz are among its investors.

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"The most upsetting aspect is that we as an industry are continually asked for openness, yet as a U.S. citizen, I receive no insight into [regulator] decision-making," Blish said.

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Both centralized and decentralized platforms offer staking services that enable users to stake currency without installing specialized computer equipment or possessing a minimum of 32 Ether. According to research by Staked and Kraken, the expected value of staked assets at the end of 2022 was $42 billion.

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According to Blish, unlike centralized platforms like Kraken, Lido functions as "plumbing" to provide staking services. "It's a piece of software," Blish added. "Either a user says I choose to interact with the provided service or I do not. And the user has complete command." He explained that withdrawals of staked Ether tokens are not yet possible on the Ethereum blockchain, but users would have full control over their cash once they are.

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The Lido DAO administers Lido's governance. Members of the DAO vote on the Lido protocol's most important parameters. The scripts that run the Lido project are open-source and available to the public on the blockchain. Blish, who resides in New York, stated that DAO contributors are located worldwide.

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"The greatest risk I see as a citizen of the United States is if they say you can no longer communicate with or contribute to these kinds of protocols," Blish added. "As a DAO contributor, does it mean I can no longer contribute to Lido? Try I need to leave and do something different?"

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