[EGG] st2024 v1: Lido Contributors Group Request for Grant Funding to Advance GOOSE Goals


Source: Archival photograph of a stETH token (2023, colorized)

tldr

  • Continue grant approvals to the Lido Contributors Group to advance towards hasu’s GOOSE Goals
  • Development, audit and deployment of multiple Staking Router modules, Dual Governance, Layer 2 integrations and reviews and zkOracles
  • Best-before date: 2024-06-30
  • 22.5m DAI + 200k LDO in grant continuity for the Lido Contributor’s Group, with an additional 10% contingency
  • 8.6m DAI in grant continuity for the Liquidity Observation Lab

Basic Data

Field Description
Proposal Name st2024 v1
Which of the following GOOSE goals is your proposal advancing? 1: Lido has effective and decentralized governance, 2: Lido attracts the best validator set in the market, 3: stETH is the most used token in the Ethereum ecosystem
Proposed scope of work Engineering Coordination, stETH Core Protocol Engineering, Validator Set Engineering for the Staking Router, Alerting and Monitoring Tooling, Community Module, Governance Core Protocol Engineering, API & Components
Objectives Significantly advance all three GOOSE goals by making meaningful progress towards researching and deploying new Staking Router modules, dual governance implementations
Total Budget Request 34m DAI, 200k LDO
Best-before date 2024-06-30

Review of 2023

2023 was a significant year for Ethereum and for Lido in particular. After opening up withdrawals in May 2023, users have withdrawn over 2.2m ETH from Lido and counting, including through validator exits. There is now a fluid interaction possible for ETH holders ranging from permissionless staking at any multiple of ETH through to withdrawals, including through validator exits.

The next frontier of decentralized liquid staking includes permissionless onboarding of solo-stakers to the validator set, which is in progress as part of the Community Staking Module.

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The Lido v2 budget running from May 2023 through to December 2023 was approved earlier this year.

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As expected and in line with conservative budgeting proposals drafted by the Lido Contributors Group, there is once again a significant positive budget variance, driven by two major factors:

  • Undercontracting on external consultants and development contributors relative to the plan
  • Rolled out auditing expenses for projects that will reach the audit stage in Q1 and Q2 2024

Given that, through the EasyTrack process, DAO grantees do not receive upfront funding for the full amount of the grant, the budget variance is rolled into the surplus and does not have to be ‘returned’ (with the exception of any residual balance, which will roll into the following grant cycle).

For evaluating the impact on an ongoing basis, we invite the community to review and comment on the Lido Protocol Economics Dune dashboard that we have created in close collaboration with Lido Analytical contributors.

The most notable change throughout 2023 has been the reallocation of liquidity incentives following an objective-based problem statement for liquidity design and the relaunch of the reWARDS Committee as the Liquidity Observation Lab.

Liquidity Observation Lab Retrospective

The biggest budget overhaul in 2023 came through the revamp of the reWARDS Committee as LOL. This was accompanied by a change of strategy to stop using the LDO token for incentivizing liquidity. LOL also pursued a systematic search and test approach for identifying the most effective ways to create sustainable and sticky liquidity to facilitate stETH utility and large trades.

Throughout the Lido v2 period the Liquidity Observation Lab has filtered down incentivization approaches through fewer and fewer venues with the goal of increasing the amount of effective maximum trade size that could be possible at a threshold level of slippage.

Description Proportion
Professional order book 25.00%
Curve 12.23%
Stablecoins 9.39%
Projects 6.85%
ETH 30.70%
Unspent 15.83%

The excellent (w)stETH Liquidity dashboard summarizes an aggregate view of on-chain liquidity reserves and trading venues. Greater liquidity utilization and higher trade volumes all contribute to long-term smart and sticky liquidity. The long-term marker for organic demand for stETH will be the ability to wind down LOL without an appreciable impact on overall liquidity reserves.

The Liquidity Observation Lab also observed with great satisfaction how, since the end of the summer, off-chain venues have begun listing stETH against ETH and USD pairs.


Source: Glassmarkets

At the moment, there is in excess of $4m in order book depth at 200bps across venues such as ByBit or OKX. With more organic use-cases emerging every day, we expect this order book to develop with positive momentum over time. Furthermore, B2B integrations have accelerated as structured product issuers and qualified custodians have continued their trend of adopting decentralized, open-source liquid staking - stETH is by all means an institutional-grade liquid staking asset.

st2024 v1

st2024 v1 is a 6mo grant request to advance all three of the GOOSE goals approved by the DAO earlier this year. All these goals are crucial for realizing decentralization objectives around governance minimization, validator diversity and stETH utility.

Continuity for ongoing projects being outsourced to Pool Maintenance Labs Ltd., Argo Technology Consulting Ltd. or serviced by RCC, to collect functions relating to protocol execution, sponsorships and development support for the DAO. These existing contributor channels can mitigate present business continuity risks while advancing decentralised protocol governance.

This proposal would ratify the below budget request that will officially engage the Lido Contributors Group for a further 6 months through a funding injection into three multi-signature addresses

DAI 22.5m and LDO 200,000 will be approved for the period Jan-2024 to Jun-2024, distributed across the below grant approvals. A further 10% contingency is reserved.

Approval of a continuation of the previous grant to Pool Maintenance Labs Ltd., an independent not-for-profit staking advocacy and technical services company and existing contributor in the British Virgin Islands, transferred to a company-authorized 4/7 multi-sig wallet with signers listed below: 0x17F6b2C738a63a8D3A113a228cfd0b373244633D

adcv: 0xcC692077C65dd464cAA7e7ae614328914f8469b3
folkyatina: 0x75E01e1B7a4Ac280fB744A8153beE668A7e83abd
kadmil: 0x9A3f38AF97b791C85c043D46a64f56f87E0283D4
Azat: 0xA14BFfd91fb571bF1D9Bec70f273CAc13CA127Fa
krogla: 0x000000DfE832ccD7a4011a1Fca34602C9a598353
skozin: 0x181dbb1E8156518a58Cbb83AF4D3C41E731c6bdF
rotorless: 0xF6E9a144D727C239cC2A7C64C48B8b9A0E39b3dc

Approval of a continuation of the previous grant to Argo Technology Consulting Ltd, an independent Panamanian software development company operated as a not-for-profit, funded through a company-authorized 4/6 wallet with signers listed below: 0x9B1cebF7616f2BC73b47D226f90b01a7c9F86956

  • adcv: 0xcC692077C65dd464cAA7e7ae614328914f8469b3
  • dgusakov: 0x992Ce4eEc8288274f60880c7770DdA265fCCe610
  • Marin: 0x04e7C0350241b818eE5c92cc260008C9898F41cf
  • ShardYaco: 0x59d07dc34B135B17b87840a86BFF7302039E7EDf
  • madlabman: 0xA8815bc0B541D0a28dA7b8f759EB7E157e8fF8b0
  • Alex_L: 0xB339918e75664a07BB650513427559920C0A0F6C

Approval of a continuation to fund the RCC 4/6 multi-sig wallet with signers listed below: 0xDE06d17Db9295Fa8c4082D4f73Ff81592A3aC437

  • Marin: 0x04e7C0350241b818eE5c92cc260008C9898F41cf
  • Alex_L: 0xB339918e75664a07BB650513427559920C0A0F6C
  • irina: 0x8CeD94df9ddba8E38b6cb36639B6635F19Eb25C6
  • UniteTheClans: 0x81ca68f085282434D15c09619360D6513710a979
  • zuzu_eeka: 0x004812da927b5dcd07e7329609edd75e25d2d295
  • adcv: 0xcC692077C65dd464cAA7e7ae614328914f8469b3

If the proposal is approved, the first funding for disbursement to finance protocol operations would be requested from the DAO via EasyTrack 5 motions.

Pool Maintenance Labs Ltd. 0x17F6b2C738a63a8D3A113a228cfd0b373244633D
Argo Technology Consulting Ltd. 0x9B1cebF7616f2BC73b47D226f90b01a7c9F86956
RCC 0xDE06d17Db9295Fa8c4082D4f73Ff81592A3aC437

Multisig signers & addresses may be rotated by specified multisig after signalling the change to DAO on the governance forum. Number of signers can’t be lowered, and the threshold must be at least 50% of the signers.

A further 8.5m DAI in wstETH at market value would be approved for the Liquidity Observation Lab to continue a previous grant to further liquidity incentivization, experimentation and research. LOL will continue to work to deliver public resources on stETH liquidity.

To deliver on hasu’s GOOSE goals, areas of focus during the budget period will include:

  • Engineering Coordination
  • stETH Core Protocol Engineering
  • Validator Set Engineering for the Staking Router
  • Alerting and Monitoring Tooling
  • Community Module
  • Governance Core Protocol Engineering
  • API & Components

In particular, for the development, audit and deployment of multiple Staking Router modules, Dual Governance, Layer 2 integrations and reviews and zkOracles.

At the end of the budget period, if GOOSE goals can be advanced further, the Lido Contributors Group may request another grant from the DAO to continue their contributions.

14 Likes

…stETH is by all means an institutional-grade liquid staking asset.
:handshake:

Enjoyed the new structure and format!

The noticeable difference in institutional liquidity depth and rollback on incentives bodes well!
LFG
(looking for geese)

5 Likes

Snapshot vote started

The [EGG] st2024 v1 Lido Contributors Group request for grant funding to advance GOOSE goals Snapshot has started! Please cast your votes before Thu, 14 Dec 2023 16:00:00 GMT :pray:

5 Likes

So we need EGG to make GOOSE happen, right?

3 Likes

Great job.
I found that there is currently only 1m DAI left in the treasury. Will the stETH in the treasury be used to support these budgets in the future? Or should we do treasury diversification #3 ?

3 Likes

It’s a good question ! tldr the idea is that treasury stETH will be used to support these budgets going forward.

The DAO recently approved the formation of a Treasury Management Committee with very limited scope. Their role is to propose and enact simple, automatable strategies. As always, DAO token holders have the ultimate say regardless of what the Committee decides and on-chain votes are anyway required to enact these strategies. The first strategy after staking ETH in Lido has been to deploy an on-chain swapper to convert stETH into DAI. The Committee’s ultimate aim is to disband itself, which it may do in the medium term provided the DAO is equipped with sufficient, automatable, strategies of limited scope.

2 Likes

Okay, given there is about 9.2m ETH staked in lido, the ask is basically 1/2 of the total income in 2024, or 1/3 of the current stETH balance in the treasury
Did treasury stETH has other usage apart from insurance fund? 25k stETH insurance fund(after supporting the budget) vs 9.22M ETH under management seems a little bit scary.

Also, i am curious about why we are not planning a new treasury diversification?
-The LDO token emission is actually quite low these days.
-LDO market cap is higher and liquidity is much deeper than last June , a 0.5% or 1% supply increase won’t change much for a 90% circulation token.
-LDO still constitutes 70% of the treasury funds.

3 Likes

Yes these are all fair points. We just described a process to move from stETH to DAI more easily. Token holders could well signal their desire to run a treasury diversification #3 if they believe it’s suitable. Fortunately there is a separate slashing provision wallet outside of the Aragon surplus which is partly a mitigant. LDO use in incentives came to an end this summer with the switch to wstETH

1 Like

Given this is a substantial ask, do you anticipate there will be regular updates and check-in’s (in whatever form is most helpful for everyone and least burdensome for contributors performing the work) between closing of the Snapshot and end of June 2024?

Similar in spirit to the ongoing NO community calls.

7 Likes

Yes this is a useful idea. On an ongoing basis we have a public dashboard, created in close collaboration with the Lido Analytical team, which should allow a live view into actuals. We could also host a monthly call to offer updates of ongoing progress and make comments relative to budget vs actuals.

4 Likes

Yes, that would be great. And there may be a chance you could get good feedback / ideas, assuming there is an engaged, informed audience in attendance :innocent:

4 Likes

Snapshot passed

Thank you all who participated in vote! :pray:

The results are:
Provide funding : 66M LDO
Decline : 35k LDO

1 Like

As an interim solution, until swapper factories can be deployed to safely swap stETH in line with TMC-1, we propose to deploy 3x stETH EasyTrack contracts to the LCG under the parameters of this EGG request. Each would have a monthly limit of 1k stETH and we will propose their removal as soon as the swapper factories can be safely deployed.

1 Like

For each LCG committee(ATC, PML and RCC) a separate Easy Track top up setup of factories is going to be attached to Easy Track via the upcoming on-chain voting (in case approved by the DAO).

1 Like

UPDATE

Scheduling a community update call to review st2024 v1 progress:

2024-03-13T16:00:00Z2024-03-13T17:00:00Z

We will post a mid-budget update before then and host a community call for questions and answers. Please note, the focus will be on budget progress, rather than product updates.

As usual, you can consult our WIP Dune Dashboard reflecting overall DAO economics in near real-time.

Look forward to hearing from members of the community soon.

3 Likes

Ahead of tomorrow’s call, please find an update on the progress of the EGG request

Overall, grant requests are being filled at significant positive variances. Much of this is built-in conservatism with EGG requests at such an early development stage. These variances are realized immediately, as EGG request grantees only receive funding they need through an optimistic governance EasyTrack model.

We believe this conservatism is warranted on account of the unpredictable timing delays that exist in open-source software contributions, such as the timing of smart contract audits and ongoing focus on new projects.

The major milestone this quarter has been the release of Simple DVT, a landmark Staking Router module release.

2 Likes

Call is live right now until 17h30 CET! Join to ask questions and review the progress of the EGG request

4 Likes

Previous [EGG] st2024 v1 grant request approved 200,000 LDO which were never transferred, the remaining balance of LDOs transferred by on-chain vote #160 in terms of [LIDO-v2] May 1, 2023 - December 31, 2023 | Lido Ongoing Grant Request were used instead. To be able to disburse grants delayed due to insufficient balance, PML will be requesting 96,666.62 LDO transfer during the next Aragon vote.

изображение

All unused LDOs will be incorporated into [EGG] st2024 v2 in case approved by the Snapshot or returned back to the Treasury.

The update about Aragon vote start will be provided in current thread.

3 Likes

:loudspeaker: Calling all participants! The on-chain voting aiming to transfer 96,666.62 LDO from Treasury to PML multisig is now live!
You’ve got 48 hours until July 4th, 2PM UTC to take part in the main phase.
Please, vote here: Lido DAO Voting UI

1 Like