This is not a fleshed out proposal and adding an unhelpful comment doesn’t add value to the proposal.
If you expect a thoughtful conversation I would ask you to answer the following questions:
Why is it a good idea?
What is the short vs long term benefits for taking treasury funds to pay people for simply holding LDO?
Is this the only path to driving value to LDO holders?
How can we increase governance and community participation?
In my mind, all that does is alleviate selling pressure while spending treasury funds. MakerDAO did this perviously and almost destroyed the protocol in a down market being forced to market sell their token to cover CDPs as they had spent most of the treasury on a buy back program.
It doesn’t encourage the operational activities that end up driving value to the treasury which is governed by LDO holders. The goal in my opinion is not to simply reward LDO holders for holding. That does not contribute value to the protocol. Instead I would rather spend treasury funds growing the protocol and increasing adoption long term.
More than happy to continue the discussion on this as we are exploring many ways to improve LDO utility.
Yes, but the other side of this is that constant emissions result in a zcash chart … should be a good balance … and how does holding lido not contribute value? the entire invention of crypto is making it more scarce. by holding lido, one is making it more scarce from the mkt … single sided staking is a clean incentive mechanism
also is the goal of LDO to build the LDO treasury? or is it to benefit LDO holders?
the two are separate incentives as the founders and likely mr jbeezy likely have a cost basis significantly below the current price, so they are paid off - so sure they want to see the treasury grow
whereas LDO holders that bought from mkt, e.g. myself (i actually think i am the largest LDO token holder of the current circulating supply) want to go moon immediately lol
if cash flow is paid to the token holders, is that necessarily a good idea? then we have DCF analysis, which creates weight on the token price as opposed to the L1’s which are consensus driven for which there is no way to rly value that hence moon bag.
given that LDO is a consensus layer project and not directly a defi project, would like to see LDO token be geared towards L1 consensus staking as opposed to “Governance” and “Fees” ← this model is detested by the mkt … please correct any misconceptions or anything that is incorrect
I think the reason that posts like these don’t get much attention is because they are not fully developed proposals, don’t present any evidence or analysis in support, and generally come across as very short-term thinking to people who have been involved with Lido for a meaningful amount of time.
If the main point of the proposal is to pay users to hold LDO, then I can see why staking governance tokens would be a good idea. But I don’t think that there is a good argument that has been made for paying users for simply holding, and so no real need to implement staking for governance…
It’s possible to use staked tokens for voting without paying out additional tokens for doing so, but generally a lock-up is most useful where governance tokens do receive incentives for voting or some other activity. In this case, since LDO isn’t receiving any income directly, I don’t think using staked LDO for voting would do much to reduce “selling pressure”.
I personally would argue that the goal of LDO is not to “build the LDO treasury” or to “benefit LDO holders”. The goal of LDO is to provide a governance mechanism so that the protocol can be developed and maintained in a decentralized manner.
Your argument that contributors and founders have a lower cost basis than you and so “they want to see the treasury grow” doesn’t make any sense. And you say yourself you “want to go moon immediately lol”. As someone who has also purchased Lido and believes in the idea of creating a decentralized protocol for issuing liquid staking tokens, I have no interest in “mooning” your bags at the expense of the long-term health of Lido, whether or not you are the largest holder of circulating supply.
It’s great to have people contributing ideas. But when someone’s first post is calling to be paid for just holding LDO without presenting evidence for what that would accomplish, it comes across to me as being a short-term grab for gainz at the expense of long-term health of the protocol. I think there is plenty of room for improvement but this ain’t it.
To be fair, '$LDO holders will have the right to share up to 5% of the total Beacon Chain staking revenue. '(not exactly the same words, but exactly the same meaning.) was written on the whitepaper. So I don’t think it is unacceptable to see someone post an idea to make cash flow for $LDO holders.
To be honest, $LDO is defined as a governance token, but it is just a meritocracy( Core team & big holders) governance. Only less than 100(actually 82) have ever interacted with Lido Aragon voting contract.
Yes, that is not a unique feature for Lido among DeFi protocols. But what’s the reason why the left 10,000 holders hold a governance token and never used their power?
To be realistic, we used $LDO to incentive protocol participants and contributions. All these need to be cash out either by current payment, or by the payment in the future. I noticed there are strong tones in the community that strongly contempt ‘speculators’. In my mind, a healthy ecosystem should tolerate ‘speculators’ as part of it. Without any ‘speculators’ involved, $LDO may be kept under a quite lower price and have little power to be used as incentive mechanism for protocol grows.
You’re right, it’s not a sensible position that there should never be any cash flow to LDO holders. But I consider there to be a big difference between cash flow from protocol revenue and dilutive airdrops to passive governance token holders. I think the point is what do these payments accomplish (whether they are incentives to LPs, ecosystem grants, or payments to token holders)? In my view there are clear reasons for paying LDO to LPs to provide healthy liquidity for staked assets, for example. I still don’t think there has been a well-supported argument for the types of payments we are discussing here.
You’re also right about there being a need for more active participation in governance, etc. From my perspective, Aragon voting often confirms the outcomes of proposals that have been discussed in forums, tested via Snapshot voting, or otherwise have been previewed to the community. So in some cases I’ve participated in the discussions in those venues where smaller holders can have more of an impact. But as you say the low participation in on-chain voting is not uncommon for similar projects, so it’s tough to say that this has anything to do with Lido specifically. The ability to delegate voting power is one important feature that can help smaller holders to influence voting outcome with less voting costs or fatigue.
I see where you are coming from in viewing ‘speculators’ as potentially helpful in supporting the value of LDO (and thus purchasing power of the Lido treasury). But I don’t think that drawing in short-term investors should be the goal at this point. These are early days for Lido, the protocol is growing quickly and expanding into new protocols and applications, and everyone involved is focused on building for the future. And for those with a low time preference undervalued tokens are an opportunity…
as per coingecko, the uniswap, curve, 1 inch pools are generally pretty illiquid for the stETH-ETH pair. if this is correct (which is may not be), then shouldnt we explore a new incentive mechanism besides giving LDO tokens to stETH-ETH LPs?
There is a recently formed reWARDS committee that oversees these types of incentive programs. The goal of that committee is to monitor liquidity and trading activity across different exchanges and to provide reporting back to the DAO on effectiveness and changes to the incentive budget. The January budget is being worked on right now and there will be a public post on that in the next few days. But to answer your question how long LDO incentives will continue… they will likely continue for the foreseeable future, although the specific pools incentivized and reward amounts will change based on effectiveness and needs. For example, there will be more rewards directed towards pools and platforms on Solana and Terra to help grow Lido’s presence on those protocols, while certain incentive programs on Ethereum DEXs such as 1inch have recently been scaled back due to low trading volumes relative to TVL in the pool.
In addition to public posts by the reWARDS Comittee, there are several Dune dashboards that show liquidity and utilization metrics across different pools where LP incentives are offered (Summary Dashboard, Detailed Dashboard). Some of the metrics that these reports show are
How much liquidity is in the pool per $1 of rewards offered - This measures whether the rewards offered are actually drawing in liquidity
How much trading activity takes place per $1mm of liquidity - This measures whether the liquidity gathered in the pool is actually being used for trading activity i.e. is it worth the liquidity worth the cost of acquisition
On your comment about low liquidity, I think that you may be taking too narrow of a view on this. It is definitely true that much of the stETH/ETH liquidity is contained in the Curve pool, but for a stable pair that should not be surprising. Balancer has another stableswap stETH/ETH pool which is not shown on CG. I think you may also be referring to low trading volumes across different exchanges (which can be skewed lower during a holiday week), which is ceratainly one consideration. But for stETH to be integrated into different applications (ex. as lending collateral) there needs to be capacity to convert large volumes of stETH with minimal slippage which is one reason for continuing to incentive liquidity in certain pools even if the “utilization” of that liquidity is relatively low.
Higher $LDO price directly translates into juicier incentives, which at the end of the day helps increase the adoption of the protocol.
So it’s not shortsighted to care about $LDO price.
$LDO airdrop going brrrrr is sustainable only if there is an countering incentive to hold the airdropped tokens.
Currently, when being airdropped $LDO token, there is little (if no) incentive to hold it:
Not listed on TIER1 CEX,
cannot be used as a collateral in DeFi,
cannot be staked anywhere to earn passive income.
Non productive assets end up being sold for productive one.
Why not implementing a system similar to Curve?
1- fees captured by the protocol are redistributed (25%? 50%? 100%?)
2- only staked LDO (veLDO) can pretend to earn part of the protocol’s revenue, and the longer you stake (up to 4 years) the bigger your share.
3- Could add a condition to boost governance participation: only veLDO detained by addresses who voted (or delegated their voting power) are eligible to receive a share of the protocol’s revenue.
Lido doesn’t have a whitepaper though. LDO tokens have complete governance power over all parts of Lido protocol through Aragon-based DAO.
I personally don’t have strong opinion over what LDO tokenomics should be, except that I think it’s extremely easy to butcher up the project by implementing half-thought out plans before the protocol and community are strong and stable enough to handle it. There are projects where tokenomics are key to go to market and overall success (OHM anyone?), but I don’t think Lido or any other liquid staking protocol are like that.
Not quite sure whether this doc can be called the whitepaper. Yes, there is a miss quote in my post that actually ‘The minted stETH(10% of net rewards) tokens are distributed between the node operators(50%) and the DAO’s treasury(50%) account.’. So the cash flow is owned by the treasury, not directly distributed to $LDO holders.
Fairly well, cash flow might be a future bonus for me. No matter whether it will come, I still take optimistic on Lido with my best wishes.
Wanted to add my thoughts on the recent threads. I think $LDO price is definitely important as it will be the fuel in the short term to help grow the DAO community while giving the protocol more runway to scale revenue.
LDO dividends don’t feel like the optimal solution right now.
The reason I am cautious and asking if paying holders to not sell is the right play, is because that doesn’t feel productive for Lido to me right now. Sure some public companies do that but that isn’t Lido. We have a volume based revenue model and are only 1 year old. Assuming 5% yield on $1 billion USD equivalent and the treasury captures 5% of yield total you are looking at $2,500,000. Not great margins.
Here is why we rely on LDO rewards right now
Mercenary capital is a necessity
We need to hold the peg with ETH
Bribing is being arbitraged
LP tokens for PCL or bonds is expensive
Protos like Tokemak are still not fully launched
So we cannot stop them or drastically shift them, yet.
We are working on
Ways to increase capital efficiency of the rewards program
Partnerships with protocols like Tokemak
Looking to expand to L2s while adding liquidity there
All of this has a high and unknown cost as we are testing these strategies out and then optimizing. We know utilization is not perfect and are working on it in a controlled manner but making sure they have liquidity to soak unexpected volatility like in July last year.
I realize it doesn’t always appear obvious what Lido is attempting to do and that is an area we want to improve.
Honestly, if we did a vote escrow type lock up I would rather have it do things that propel Lido forward, while creating value to token holders AND encouraging active governance which isn’t just voting but being involved in the decision making process. Maybe we can take bribes from protocols that want us to expand there next and share that to anyone who discusses/votes.