Authorize a Contingent LDO CEX Liquidity Market-Making Mandate

[lidoecosystem-ops]

TL;DR

• This proposal asks Lido DAO to authorize a contingent LDO centralized-exchange liquidity mandate to reduce the risk of LDO pair degradation or delistings on centralized exchanges. Given observed significant decreases in LDO trading volume, organic market making activity has become less profitable for market makers and the Growth Committee would like to proactively prepare for a scenario where their withdrawal liquidity provision on LDO pairs risks the delisting of such pairs from the respective trading venues.
• The maximum authorization, funded from the Lido DAO Treasury, is up to $1.5m (~4,000,000 LDO at $0.37/LDO at the moment of writing, subject to 7,500,000 LDO cap) as a recallable LDO facility for market-making inventory and up to 480,000 USDC in expenses for fixed retainers and directly related costs over up to 12 months from the activation date. The authorization itself has a 2-year shelf life if not activated.
• No deployment would occur unless the Growth Committee determines that LDO liquidity on centralized exchanges is insufficient, or likely to become insufficient, such that a market-making mandate is necessary or prudent. Until then, necessary funds should remain unencumbered and readily available in the Lido DAO Treasury for a potential deployment. While this authorization is to be ongoing, a snapshot proposal may end this authorization at any time, subject to any remaining terms on concluded external agreements; any changes to scope/budget for these activities require separate authorization.
• Disbursement from the DAO Treasury to the Liquidity Observation Lab should occur through Easy Track transfer motions where available. If the existing Easy Track setup does not support the required token, limit, or recipient configuration, this proposal authorizes the deployment and DAO registration of new Easy Track instance(s) needed to route the approved LDO and USDC caps to the Liquidity Observation Lab multisig.
• If activated, the intended structure is: Lido DAO makes a recallable LDO facility available to the Lido Ecosystem Foundation; the Lido Ecosystem Foundation makes a back-to-back recallable LDO facility available to the selected market maker; and the LDO is operationally disbursed to the Liquidity Observation Lab and onward from there under the approved mandate structure. Where possible, contributors will seek to keep market-making assets in a centralized exchange account belonging to the Lido Ecosystem Foundation, with the market maker granted limited trading permissions and no withdrawal rights. The mandate is intended to support orderly two-sided liquidity and listing continuity, not to support, target, or influence the market price of LDO.
• Once activated, quarterly updates covering USDC spend, outstanding LDO, and high-level performance indicators will be shared on the forum together with a completion report, published within two weeks after the program ends.

Proposal Overview

The DAO is asked to approve:

1. a contingent LDO CEX liquidity mandate for up to 12 months from activation;
2. a recallable LDO facility of up to $1.5m (withdrawable in LDO equivalent, capped at 7.5m LDO) from the Lido DAO Treasury (in addition to the approved EGG budget);
3. LDO $1.5m equivalent based on the Coingecko LDO closing price in USD on the day before EasyTrack motion initiation;
4. a budget of up to $480k in USDC from the Lido DAO Treasury (in addition to the approved EGG budget);
5. authority for the Growth Committee to decide whether the mandate should be activated - and to negotiate favorable conditions with market makers - based on LDO CEX liquidity conditions;
6. authority for the Lido Growth Committee to coordinate implementation and for the Liquidity Observation Lab to support execution and onward operational disbursement;
7. disbursement from the DAO treasury to Liquidity Observation Lab through Easy Track transfer motions; and
8. deployment and DAO registration of new Easy Track instance(s), if needed, to support transfers of the approved LDO and USDC amounts to the Liquidity Observation Lab multisig at 0x87D93d9B2C672bf9c9642d853a8682546a5012B5 on Ethereum mainnet.

The authorization expires two years from the date of the DAO vote authorization if not activated earlier.

This proposal does not approve any specific market maker, exchange, call option, warrant, token purchase right, price-support activity, or use of borrowed LDO for governance voting.

Motivation

Maintaining adequate LDO liquidity on major centralized exchanges can help reduce listing-continuity risk and preserve orderly secondary-market access for tokenholders. The Lido Ecosystem Foundation does not currently engage any market makers on LDO pairs. If liquidity deteriorates materially, contributors may need to respond quickly to exchange concerns or market-quality issues. Exchanges may give little advance notice of a potential delisting due to insufficient liquidity. A pre-approved, capped, contingent mandate avoids rushing governance during a potential venue review or delisting process.

This is a preventive risk-management measure. It should not be read as a commitment to activate a market-making program immediately upon approval of the proposal but rather an option to activate at any time.

Market Sounding and Budget Calibration

Preliminary market soundings indicate that comprehensive LDO CEX market-making coverage generally requires token inventory, a fixed retainer, option-style compensation, or some combination of these. This proposal avoids option-based compensation and favors a fixed-retainer structure because it is more predictable and easier for tokenholders to evaluate.

The requested cap of 480,000 USDC plus $1.5 million in LDO equivalent (capped at 7.5m LDO), valued when the relevant Easy Track motion is initiated, is neither based on nor intended to disclose any specific quote. It is a conservative authorization envelope informed by the overall range of market feedback received to date.

The Lido Ecosystem Foundation has received more favorable quotes below this authorization cap, and the final mandate may be smaller, cheaper, narrower in scope, or not activated at all. The proposed cap intentionally includes a buffer to avoid execution risk if final terms, venue coverage, onboarding requirements, custody setup, fee tiers, or timing differ from current expectations. The objective is to avoid returning to governance solely because an otherwise acceptable mandate is marginally above a tighter approval amount.

Activation Criteria

The mandate may be activated only if the Lido Growth Committee determines that LDO CEX liquidity is insufficient, or likely to become insufficient. They may consider, among other factors:

• exchange communications about liquidity, listing quality, or delisting risk;
• deterioration in spreads, order-book depth, or market-maker uptime;
• upcoming listing reviews or pair-maintenance processes; and
• cost, counterparty risk, legal, regulatory, and operational feasibility.

If that determination is not made, the mandate remains inactive.

Easy Track Disbursement Mechanics

Disbursements of both the USDC retainer/cost budget and the LDO facility should come from the Lido DAO Treasury and be routed to the Liquidity Observation Lab through Easy Track transfer motions rather than a one-off treasury transfer, where the relevant Easy Track setup exists and has sufficient token and limit support.

For this mandate, the intended Easy Track recipient is the Liquidity Observation Lab multisig at 0x87D93d9B2C672bf9c9642d853a8682546a5012B5 on Ethereum mainnet. The approved Easy Track configuration should support, as applicable:

• LDO transfers up to the approved $1.5M equivalent cap for LDO (capped at 7.5m LDO);
• USDC transfers up to the approved 480,000 USDC retainer/cost cap (for the maximum term of 12 months, disbursed at the start of each quarter via Easy Track).

If existing Easy Track instances cannot support the required LDO or USDC transfers to the Liquidity Observation Lab and/or the USD cap for an LDO-denominated transfer amount, new Easy Track instance(s) would be deployed and registered through the relevant DAO on-chain vote. Once available, individual drawdowns should follow the ordinary Easy Track process, including the objection period and any applicable per-motion or per-period limits. The Growth Committee’s activation determination remains a prerequisite for any mandate-related drawdown.

Mandate Structure

Component	Maximum amount	Purpose	Treatment
LDO facility	Lower of $1.5M LDO equivalent based on the Coingecko LDO closing price in USD on the day before EasyTrack motion initiation or 7.5m LDO	Market-making inventory funded from the Lido DAO Treasury	Recallable inventory expected to be returned under final documentation or pursuant to a DAO vote or Lido Ecosystem Foundation determination, disbursed only if mandate is activated and services are provided
USDC budget	480,000 USDC	Fixed retainer and related costs funded from the Lido DAO Treasury	Expense only if mandate is activated and services are provided

Key execution principles:

• the legal and economic intent is a recallable LDO facility to the market maker;
• both the USDC retainer/cost budget and LDO facility are to be sourced from the Lido DAO Treasury and transferred to the Liquidity Observation Lab through Easy Track motions, using existing instances where available or newly deployed/registered instances if necessary;
• Foundation-owned CEX accounts with restricted market-maker API access are preferred where feasible;
• direct unsecured transfers to market-maker-controlled accounts should be minimized;
• unused LDO or USDC should remain with, or be returned to, at most within 30 calendar days from the time of disbursement, the DAO or DAO-authorized treasury address; and
• any deviations from the approved cap or purpose should require further DAO approval.

Market-Maker Selection and Restrictions

The Growth Committee may negotiate with one or more professional market makers. Selection should consider venue coverage, reliability, creditworthiness, cost, reporting quality, willingness to use Foundation-owned accounts, and legal and compliance suitability.

Any final mandate should require that:

• LDO provided under the facility is not used for governance voting;
• Activity is limited to two-sided liquidity provision and related inventory management;
• Manipulative trading, wash trading, spoofing, and abusive practices are prohibited;
• Withdrawal permissions are disabled or tightly controlled where Foundation-owned CEX accounts are used;
• The Lido Ecosystem Foundation or its delegate holds reporting, recall, and early-termination rights (30 days notice period for termination) in the associated legal agreements;
• No call options or similar upside instruments are granted without separate DAO approval;
• The agreement ceases upon delisting of the relevant pair, with no further costs incurred from that point.

Risks and Mitigations

• Counterparty risk: mitigated through due diligence, legal documentation, recall rights, and preference for controlled accounts.
• CEX custody risk: mitigated by limiting balances, using reputable venues, segregating accounts where possible, and disabling market-maker withdrawal rights.
• Market integrity risk: mitigated through contractual restrictions and a mandate limited to orderly two-sided liquidity rather than price support.
• Transparency risk: mitigated through public reporting, subject to confidentiality and legal constraints.
• Execution risk: the program may not prevent a delisting if a venue acts for reasons unrelated to liquidity.
• Continued delisting risk: If a delisting is decided upon despite additional liquidity provision commitments, any arrangements with external market makers should include a provision that the agreement ceases upon delisting and does not incur any further costs from that point in time.

Reporting

If activated, the Growth Committee should provide:

1. an activation notice on the forum in the thread confirming that the Growth Committee made the required determination;
2. a high-level mandate summary, including intended Easy Track drawdowns, LDO amount, expected monthly retainer, venue/pair scope where disclosable, and whether Foundation-owned CEX accounts are used;
3. quarterly updates covering USDC spend, outstanding LDO, and high-level performance, including market-maker uptime and the percentage of time agreed liquidity-depth KPIs are met at 50, 100, and 200 basis points from the mid-price; and a completion report, published within two weeks after the program ends, covering LDO returned, USDC spent, and any residual assets.
4. a completion report, published within two weeks after the program ends, covering LDO returned, USDC spent, and any residual assets.

Material defaults, losses, recalls, terminations, or deviations from the approved mandate should be disclosed promptly where legally and operationally permissible. Lido DAO bears all financial and credit risk associated with the program.

Update

• added 7.5m LDO cap;
• 30 days notice period for early termination;
• delisting termination clause;
• minor wording tweaks.

[Aksusarya.eth]

Do I understand correctly that instead of incentivizing users to buy and hold LDO thereby creating the necessary liquidity, adding utility, and so on, you are simply proposing to allocate a budget to hire market makers in the event that LDO faces delisting?

[Protocol_Zero]

I don’t understand the poor management of the token and the indifference to community suggestions are what lead to proposals like this, we should pay to avoid being delisted. This is the first time I’ve ever heard of something like this. I’d like to know what the delegators @pgov @polar @nansen think about it.

[Protocol_Zero]

Aave basically delisted LDO because it’s a ridiculous token, not because we didn’t pay them

And what if other CEXs then realize that we’re willing to pay to avoid delisting?

[Protocol_Zero]

The idea is putting 4,000,000 LDO tokens back on the market. I’ve never heard a worse proposal.

Wouldn’t it be better to invest them to create a vault on Symbiotic, Mellow or something similar that gives this token some actual purpose?

[cp0x]

Thank you for the detailed writeup. We think the mechanism itself is cleaner than most MM mandates we have seen elsewhere. Fixed retainer instead of call options, recallable inventory, an explicit ban on price support and on voting with borrowed LDO are all sensible choices, and we appreciate that they are spelled out.

We also ran the numbers ourselves and do not dispute the premise: average daily LDO volume has fallen from roughly $96M a year ago to about $33M over the past three months (CoinGecko API), and as of September 3, ±2% order-book depth on LDO/USDT sits at only around $50-90K per side on major venues. Before this goes to Snapshot, we would like to understand five things better.

1. Activation. Given the figures above, current conditions arguably already sit close to “insufficient or likely to become insufficient,” yet the factors as written are indicative rather than binding, and the activation determination itself requires no further DAO vote, while individual drawdowns are subject to the Easy Track objection process. We recognize that communications with venues are confidential and not something to detail publicly. Precisely for that reason, the activation notice carries a lot of weight: would the Committee commit to including in it which factor(s) supported the determination and the supporting data at the time of the decision, to the extent disclosable, and to recording activation as a formal, dated committee decision? It would also help to understand what would have to change relative to today for the mandate to be considered necessary.

2. Token-denominated cap. The cap is set in USD, with the LDO amount determined by the CoinGecko close the day before the Easy Track motion. At $0.37 the facility is roughly 4M LDO, but at CoinGecko’s June 25 all-time low of $0.235 the same $1.5M would be about 6.4M LDO, roughly 2.3M additional tokens if a drawdown occurred at similarly stressed price levels. Would you consider a hard cap in LDO terms alongside the USD cap, or a price floor below which any drawdown requires fresh DAO authorization? It would also help to confirm that the $1.5M is a cumulative authorization across all drawdowns, and how cumulative usage will be tracked if motions occur at different LDO prices.

3. Practical revocability. The proposal says a Snapshot vote may end the authorization subject to any remaining terms on concluded external agreements. For comparison, the stETH/LDO accumulation mandate approved earlier this year states that no minimum notice period is required and the DAO retains the right to recall funds at any point. We understand an MM engagement realistically needs some commitment period, but since the proposal only commits to a high-level mandate summary rather than publication of the underlying agreements, what maximum termination notice period and/or termination cost do you consider acceptable in the MM contract? Without some bound on notice periods and termination costs, the revocation right risks being nominal.

4. Drawdown structure and reporting. The same stETH/LDO mandate draws funds in batches, with a report published after each batch, including confirmation that the trigger conditions remain met, before the next one can be pulled. Here the DAO bears the full financial and credit risk, yet once activated the proposal requires only quarterly performance reporting. Would you consider a similar structure: staged drawdowns, with a report and confirmation that the activation conditions still hold before any material additional LDO or USDC is pulled?

5. Scope of inventory management. The proposal says any final mandate should limit activity to two-sided liquidity provision and “related inventory management.” Does that permit the market maker to lend, rehypothecate or pledge the LDO inventory, or is it limited to quoting and rebalancing across the designated accounts? Recall rights are only as strong as the inventory’s actual availability, so an explicit contractual exclusion here would meaningfully reduce counterparty risk.

One additional clarification: would the mandate summary disclose what share of inventory, if any, sits outside Foundation-owned CEX accounts?

None of this is an objection to having a pre-approved contingency plan, which we agree is preferable to rushed governance during a venue review. Our concerns are about verifiability and the practical limits of DAO control once the mandate is signed. Clear answers on the points above would go a long way.

[Aksusarya.eth]

For some reason, you invariably approve proposals that entail expenses, yet you have never once supported ideas from external users aimed at generating revenue. This raises serious questions regarding project management and how “in-pocket” delegates make decisions

[cp0x]

Just to be precise: we have not approved anything here. There is no vote yet, and our comment above is a set of questions about spending controls, with our vote explicitly conditional on the answers. If the mandate goes to Snapshot without movement on activation transparency and recall terms, voting against it is very much on the table.

More broadly, we regularly vote against spending proposals when the controls behind them don’t hold up, in Lido and elsewhere. Our full voting record and the reasoning behind it are public, so this is easy to check rather than take on faith.

On revenue-generating ideas: delegates vote on what actually reaches a vote. If you believe treasury LDO would be better deployed productively, for example the vault idea mentioned upthread, the way to get delegate support is to write it up as a concrete proposal with numbers and a risk section. We would genuinely engage with it on the merits, and it would not even be mutually exclusive with a contingency mandate like this one.

[Aksusarya.eth]

Thanks for answer @cp0x

But for some reason, I haven’t seen any responses, clarifications, or objections in “proposal” ar any topics that didn’t originate from the project team or developers close to the project.

This isn’t directed at you or your company personally; it applies generally to all the delegates who vote.

Thanks.

[a8103419]

That is a reasonable point, and I agree. I also believe that market makers are indeed necessary."

[lidoecosystem-ops]

Thank you for good comments and questions.

1. Yes, to the extent it does not hinder our ability to negotiate requirements with exchanges and/or market makers. We can also commit to a notice of activation, see also communication around stETH/LDO trades for reference, for instance.

2. The preference is to keep this in USD primarily; however, we understand the concern and are fine to cap the LDO amount at 7.5M LDO (6% of LDO in the Lido DAO Treasury as of Sept. 3, 2026).

3. We generally seek a 30-day notice period for termination by either party in any negotiated agreements.

4. While the LDO facility will need to be drawn in full at the initiation of such an arrangement with a market maker, the budget drawdown (USD stablecoin component) can be staggered in quarterly tranches to align with the common payment schedule (frequently quarterly, pre-paid). We can use similar reporting processes here as for the stETH/LDO trades.

5. We would not be looking to impose additional constraints on the market maker here. Ideally, we would like to avoid the loan and associated credit risk as a whole as we do for stETH but that is significantly more challenging and/or costly in the case of LDO (stETH exposure is much easier to hedge). Counterparty risk here is mostly to be understood in terms of the market maker’s default risk; since any loans would be unsecured, we are not primarily concerned with their LDO stock during the contract term and prefer to obtain the best pricing possible without imposing additional constraints on the market maker’s balance sheet management.

[a8103419]

Why do proposals that bring value accrual to LDO always sink without a trace? Why is there no willingness to embrace long-term holders? Turn LDO into a means of production and create real demand.

When a DAO consistently ignores the core demands of its community, it is actively pushing all LDO holders to the opposite side. The facts are already clear: without value accrual, LDO is being marginalized. Our valuation has fallen far behind protocols like Uniswap and Aave, which are still growing rapidly.

Right now, mechanism reform is the core. If we only patch the old framework without changing the fundamental logic of value accrual, LDO cannot escape its current predicament. In fact, the market has already given a clear answer — we need to create real demand for LDO.

We also need to look at the macro backdrop. The Clarity Act is gradually moving forward, and ETH is a foundational layer of the future blockchain economy. As this trend becomes more certain, we must answer a deeper question — what role should LDO actually play in the Ethereum ecosystem? A secure protocol must also secure its own foundation.

stETH is powerful, but that power is not irreplaceable. A brand moat is what lasts. And LDO should be Lido’s most important brand moat. If we believe LDO will be strong in the future, we should make it harder to replace — both for LDO itself and for the future development of the Ethereum ecosystem.

So please, turn LDO into a means of production. Now is the best time to build.

Please do not sacrifice the most important protection — the people who still believe in this protocol — for short-term gains.

[cp0x]

Thank you for the substantive answers. The 7.5M LDO hard cap and the 30-day termination notice address our two main concerns, and staggered USDC tranches with stETH/LDO-style reporting is a sensible structure. On point 5, we understand the trade-off: an unsecured facility with no constraints on the MM’s balance sheet gets better pricing, at the cost of the recall right being a claim on the market maker rather than on segregated inventory. That risk is at least now clearly characterized.

One request before Snapshot: please incorporate the 7.5M LDO cap and the 30-day termination notice into the proposal text itself, so that what the DAO votes on reflects these commitments rather than the thread alone. With that, our remaining concerns are addressed.

[0xRenexa]

Thank you for the writeup.

Few inputs, before this goes to Snapshot

@cp0x has provided strong input leading to the 7.5M LDO cap, the 30-day notice, the staggered tranches, and the request that these live in the proposal text rather than in the thread. We will follow a similar approach with some inputs that we hope will be helpful to the DAO while structuring these agreements.

1. Name who computes the numbers.

The proposal says the Growth Committee “should provide … the percentage of time agreed liquidity-depth KPIs are met at 50, 100, and 200 basis points from the mid-price.” Those are the right measurements, but no measuring party is named. Is the number provided by the market maker, or pulled from exchange API keys by the committee? A market maker self-reporting its own KPIs is not a sound basis for the DAO to judge the mandate. An independent party is preferable, and naming the source of truth in the contract costs nothing at this stage.

The “percentage of time agreed” is not clear enough and might leave too much room for downtime and KPI non-adherence. These numbers should be set according to industry standards: uptime of 95% and adherence to KPIs at 80%.

2. Track the KPIs at two levels, per venue and aggregate.

Per venue, because the stated rationale is delisting risk, and listing reviews are run venue by venue against that venue’s own book.

@cp0x figure in post 6, roughly $50-90K per side at ±2% on LDO/USDT on major venues, is a per-venue number, on average, and it is the right metric.

Aggregate, because a market maker legitimately rotates inventory toward wherever flow appears. When depth falls on one venue and rises on another, a per-venue-only view records a breach where the behaviour was expected. Reporting both lets the committee distinguish those two cases and gives more trust in the fact that the assets are utilised to provide liquidity.

3. Custody: the controls are right, the conditionals are the gap.

The proposal already prefers Foundation-owned CEX accounts with restricted API access and disabled withdrawal rights, which is fine. One quick note: disabling withdrawals does not prevent inventory being used as collateral. On most venues, assets in an account can be enrolled in earn or savings products, auto-lent into the margin-lending pool, or posted as cross-margin collateral against an unrelated market, none of which requires a withdrawal.

Where inventory sits in provider-controlled accounts, what is needed is a use covenant rather than a transfer covenant: no lending, pledging, rehypothecation or enrolment in exchange yield or margin-lending products, with an explicit carve-out for collateral genuinely required by a named hedging venue, capped and disclosed.

4. On the allocation and the retainer model.

A question on mechanics. The facility is LDO-only. How is the market maker expected to quote both sides of the book with a token-only inventory? Based on the earlier comments I’d assume no balance sheet is provided on their side; please correct me if that’s wrong. If it isn’t, they will have to sell LDO to raise USDT/USDC to support the bid side.

As a consequence, selling to fund the bid side leaves the market maker structurally short LDO against the assets it must return. If the price rises, returning it costs more; if the price falls, it buys back cheaper. This looks like an option, and raises a question the proposal doesn’t outline: in what currency is the facility returned? LDO, or USDC equivalent, at whose election?

This is why I wouldn’t discard a loan-and-option model here. The market maker ends up selling tokens either way; a loan with a call option at least provides clarity to the DAO over the assets to expect at the term, rather than handing it over inside a retainer with a substantial budget attached to it. Worth noting the market impact of that selling: at current volumes, disposing of 40-50% of the loan over 7 to 14 days is a small fraction of daily turnover and should have minimum price impact, which makes the structure a manageable operation rather than a risk in itself.

Which brings the question back to the budget. If the tokens are going to be sold anyway, and with minimum price impact, is the 480,000 USDC retainer worth it?

5. Monitoring should be continuous, not quarterly.

In either structure, the mandate only works if someone can see whether the market maker is adding value to the book and actually reducing delisting risk. Quarterly reports, or even daily ones, are too coarse for that: they show a state, not the behaviour that produced it.

Live monitoring also needs its terms defined, because “percentage of time” is not a measurable quantity on its own.

Disclosure: I run Renexa, which does market-structure audit work. Point 1 argues for independent measurement, which is a service my firm offers, so weigh it accordingly.

[lidoecosystem-ops]

Thanks @0xRenexa for the thoughtful input. Addressing your points in order:

1. Independent monitoring: Coinwatch is currently in use. Generally, there is a preference of third-party monitoring. However, for purposes of this proposal, it should be avoided to commit to a specific provider to preserve negotiating flexibility. Other options, such as direct monitoring through read-only exchange-account APIs is also explored. Mandates generally require uptime above 95%. It is also required for any mandate under this proposal.

2. Per-venue KPIs: Per-venue requirements are preferred given that reducing delisting risk is a core objective. Aggregate performance should not mask inadequate liquidity on an individual venue.

3. Asset-use restrictions: The goal is to add explicit covenants prohibiting lending, pledging, rehypothecation and use in exchange yield or margin-lending products, where feasible within the given budget as additional restrictions may affect the final quotes.

4. Funding and compensation: The market maker is expected to provide bid-side funding, although it may also sell excess LDO for this purpose. The quotes received to date, reflect the preference for a retainer solution. Loan-and-option structures have been excessively expensive (based on implied-volatility pricing).

5. Monitoring versus reporting: Monitoring is continuous. Quarterly reporting is the cadence for public updates and is intended to keep reporting overhead proportionate.

[0xRenexa]

Thanks for the detailed response, for the transparency on Coinwatch and on the pricing work behind the structure choice.

Perhaps a last follow up question on the structure comparison:
Option value is very sensitive to strike, and in most DAO market-making deals that use a loan and call option, the strike is set well above the spot. Were the quotes you compared based on a strike near spot? If so, it may be worth asking the same providers to price a strike at 1.5x or 2x, or a hybrid of a reduced retainer alongside a smaller OTM call.
The result might come back worse, in which case the retainer would be the path if/when activated. If it comes back better, the difference accrues to the DAO.

On the rest, the 95% uptime requirement and the per-venue KPI preference are useful clarifications. Following cp0x’s earlier request, both would be worth carrying into the proposal text along with the asset-use covenants, so that what the DAO votes on reflects them.

[polar]

I think that it might help if we could get more data on how existential the situation is wrt ‘observed significant decreases in LDO trading volume.’ If we are discussing the possibility of LDO disappearing from a number of major exchanges then this is a justified. That would be potentially catastrophic for LDO. I think it worth noting we are in the early innings of a bull market, which may help and we just say the issuance changes defeated in the recent ACD, at least for now.

I think there is some merit in the critiques that LDO remains a little unloved. Looking at the H1 Report we see under S4 (‘Additional’) we have the stETH / LDO trade and NEST (with the $2,730 stipulation) but we likely we need a next step or phase. Perhaps there are ideas afoot?

[Ginsing]

The LDO/ETH valuation is trading near all-time lows without any meaningful relative strength compared to the broader market. The lack of market reaction to the NEST proposal and stETH/LDO buyback mechanics signals a key takeaway: market participants do not view these efforts as structural value drivers. Current sentiment reflects low confidence that treasury funds earmarked for buybacks will be deployed as intended or achieve meaningful net-positive impact.Annual DAO expenses exceeding $40M are unsustainable in an environment where core revenue streams are compressing and new revenue initiatives show low traction without solving LDO’s long-term utility proposition.

[Leuts]

I think most of the counter-arguments here do not rest upon the merit of this individual proposal but the larger holistic picture of LDO as an asset worth owning.

Firstly, it’s evident the DAO is funding initiatives to both increase revenue, expand horizontally and vertically, and arguably counter-intuitive to growth commit to buybacks. Realistically the buybacks are small but I think that’s fair for a project that is trying to grow, Lido is not trying to fully ossify. I think that’s fair because the very technology and network it is built upon is not yet ossified and there’s still questions of Ethereum’s place in the world.

Moving to the proposal. I assume all has been done to reduce costs, prioritise CEX liquidity, etc. thus I don’t see a problem with this proposal. The risks are relatively low.

Recommendation: prioritise maximum impact at minimum cost (80/20 it). And focus on growing organic demand.

[lidoecosystem-ops]

Re OTM calls as part of the market making package: Yes, the quotes reflect a few different combinations but pursuing a retainer model is still considered the best option.

Re proposal amendments: Yes, those will be included in the Snapshot proposal text (as discussed), incl. the uptime requirement and the per-venue KPI requirements.