Each NFT stands for a user's request to withdraw ETH, due to the NFT issuance strategy that Lido, a staking liquidity protocol, has disclosed.
At its Node Operator Community Call #5, the largest decentralized finance (DeFi) network by total value locked disclosed plans to develop a non-fungible token (NFT) to represent a user's withdrawal ETH request amount as part of the process of unstaking their ether.
As Ethereum completes its Shanghai update next month, withdrawals will be made possible.
By launching a derivative token called stETH, Lido was the first to offer ETH holders wanting to stake their tokens access to liquidity.
Users might stop staking stETH on this protocol, as per to Mariya Muzyko, product manager at Lido, and receive ETH at a 1:1 ratio. After submitting a withdrawal request, a user will receive an NFT from Lido that serves as proof of their withdrawal request.
After that, users can use NFT to get their ETH payouts. The NFT will be destroyed after the user redeems their ETH. Each NFT is transferrable, which entitles the recipient to award ETH by moving the NFT to a different address.
Users won't receive royalties, based by Lido, if they chose to sell their NFTs on the secondary market. Depending on the quantity of stETH withdrawn and the quantity of withdrawal requests, the withdrawal cycle can take anywhere from one to five days.
Early in February, Lido Finance finished designing the protocol's second iteration, which included support for Ethereum staking withdrawals after the Shanghai upgrade.
Positive signals were seen for the LDO token, which has increased by more than 12% during the last day. LDO is now selling for $2.34.