Thanks for the detailed report and the OPEX breakdown that followed. And thanks to @Kuzmich, @Nansen, @BCV, and @Leuts for the questions they raised.
I normally don’t get involved in financial governance discussions. Most of you know me from the Node Operator side: I’m the founder and managing director of RockLogic, Curated Set Node Operator since 2022, and we’ve been building Stereum, StereumLabs, and other infrastructure tooling for the Lido ecosystem.
But this report made me look more carefully at the financial picture, and some of what I’m seeing is hard to reconcile with the “cost discipline” narrative. Outside of crypto, I’m also a co-owner of a mid-sized company where I oversee the financials from the ownership side: balance sheets, cost structures, salaries, strategic direction. Not operational, but I see every number and I know what questions to ask when the P&L doesn’t add up. Some of the patterns in this report would trigger those questions immediately.
1. How does Lido’s cost structure compare to peers?
I haven’t seen this comparison in the thread yet.
Aave’s annual operational expenses sit at approximately $18M (per the recent AIP-469 discussion). Their 2025 revenue was around $140M. That’s a revenue-to-opex ratio of roughly 7:1. They run active token buybacks since April 2025. And even when Aave Labs requested $25M in stablecoins (plus token vesting), the community pushed back hard. Marc Zeller publicly challenged the terms and it went through weeks of heated governance debate before passing.
Sky (formerly MakerDAO) cut operating expenses by roughly 63% in 2025 while maintaining revenue in the hundreds of millions. Active buybacks there too.
Lido: $40.5M revenue, $45.5M expenses. Revenue-to-opex ratio below 1:1. The 2026 EGG request asks for $60M against projected revenue that, at current ETH prices (~$2,350), is going to be in the low $40M range according to the February 2026 Tokenholder Update. Different business models, sure. But whether a protocol can sustainably spend more than it earns is not a model-specific question.
2. The stETH/LDO trade in this context
The stETH/LDO trade proposal asks to allocate up to 10,000 stETH from the DAO Treasury to accumulate LDO at what it calls “historically depressed levels.”
I understand the rationale: LDO looks cheap relative to protocol fundamentals. But Warren Buffett has a famous rule: never buy back your own stock while the business is losing money. Buybacks only create value when the business generates surplus cash. If you’re running a deficit, you’re not buying at a discount, you’re borrowing from your own runway.
Lido just closed 2025 with a $5M deficit. The treasury declined from $171.5M to $157.5M at year-end, and at today’s ETH price (~$2,350) the real value is closer to $130M, possibly lower when you factor in Q1 2026 spending. The 2026 budget request exceeds projected revenue. And in that situation, the proposal is to take productive, yield-bearing assets (stETH) and convert them into a governance token that generates no cash flow and no yield, with on-chain liquidity of roughly $90k at ±2% depth.
The 10,000 stETH earmarked for this trade represents roughly 7-8% of the current treasury value. That’s a meaningful chunk of runway, converted into an asset that is, practically speaking, illiquid at any serious size. Token price shouldn’t be the priority when the protocol is not profitable. Getting back to breakeven should be.
3. The transparency gap that hasn’t been closed since 2022
@Kuzmich pointed out that verifying the compensation arithmetic is impossible without absolute headcount numbers. He’s right, and this has been an open issue for years.
Back in November 2022, a community member (Red_Bull) posted “Lido FTE & Contributor Breakdown” requesting the number of FTEs and freelancers per workstream and the funding allocation per workstream. Steakhouse responded: “We will be rolling out regular reporting on the progress of this budget.”
That was three and a half years ago. The DAO still doesn’t know how many people work across the three BORG Foundations. The report says Compensation & Service Fees were $23.2M and headcount was reduced by 15%. But 15% measured how? The absolute number of contributors? Full-time equivalents? Salary-weighted headcount? Without any of these baseline figures, the 15% is unanchored and unverifiable.
In any traditional corporate structure, whether that’s a 10-person GmbH or a listed company, this information is standard. Not individual salaries, that’s not what anyone is asking for. But total headcount, cost per FTE range, allocation across departments. That’s the bare minimum for budget oversight. It was promised and never delivered.
4. “Cost discipline” vs. what actually happened
The report frames 2025 as a year of cost discipline. Total Foundations’ expenses did go down year over year, that’s true. But look at where the savings actually came from.
Liquidity Rewards: down $6.4M. Largely because the market contracted and less liquidity needed incentivizing. That’s not a management decision, that’s market conditions.
TRP: down $3.2M. TRP is valued on an accrual basis using LDO market prices. LDO went down, so TRP costs went down mechanically. If LDO recovers, this line goes right back up. Again, not a management decision.
Events & Marketing: down $2.1M. This one is a genuine cut.
And then Compensation & Service Fees: up $5.1M. A 28% increase. Despite a 15% headcount reduction. This is the one line the BORG Foundations have full discretionary control over.
So the actual picture: roughly $2M in genuine, management-driven savings (marketing). Everything else was either market-driven or price-driven. The one area where the Foundations actively decided how much to spend, they spent significantly more. Calling that “cost discipline” is a stretch.
5. The oversight gap
This is the core structural issue behind all the points above.
In a traditional company, when revenue drops 23% and your largest cost line goes up 28%, the owners get a detailed explanation with verifiable numbers. There are supervisory boards, auditor reports, shareholder meetings. If you can’t justify the numbers, you face real consequences.
In Lido’s structure, LDO holders and the 10 public delegates (~25M LDO collectively) vote on aggregate budgets via Snapshot. The three BORG Foundations receive their grants and execute. The annual report arrives months after the fact. And the report itself admits that grant fragmentation “made it difficult to assess total spend, track performance across workstreams, and maintain consistent financial controls.” That’s the Foundations’ own assessment of their own oversight capabilities.
Delegates can only challenge what they can see. And right now, they can’t see enough.
For comparison: when the Aave community discovered that Aave Labs was routing ~$10M/year in swap fees to a private address instead of the DAO treasury, there was a governance vote within weeks that redirected 100% of revenue to the DAO. That’s what real-time accountability in a DAO looks like.
@BCV’s call for quarterly or monthly actual-vs-budget reporting is the right direction. But frequency alone won’t fix this. The DAO needs to define what the Foundations are required to disclose as a governance baseline: headcount, compensation bands, functional expense breakdowns. Not as a nice-to-have, but as a condition tied to grant approval.
6. What happens if the market bet doesn’t work out?
The February 2026 Tokenholder Update says further headcount reductions are “not the right move at this stage” and would only be reconsidered if ETH drops to around $1,000. At the same time, the same update shows that at ~$2,000 ETH, projected total revenue drops to $40.6M while the 2026 EGG budget request sits at $60M.
What does that mean concretely?
If ETH stays range-bound around current levels and the full $60M budget is executed, we’re looking at an annual deficit of roughly $17-19M. The treasury, which was reported at $157.5M at year-end, is already closer to $130M at today’s ETH prices, probably lower after Q1 spending. And since the majority of the treasury is held in stETH, any further ETH decline compresses the treasury value at the same time as it reduces protocol revenue. That’s a double squeeze: your income drops and your reserves shrink in lockstep.
Now add the stETH/LDO trade on top: another ~$23M in productive assets moved into an illiquid governance token. If ETH doesn’t recover and the budget isn’t adjusted downward, the DAO could realistically end 2026 with a treasury below $100M and a burn rate that gives it a few years of runway, not decades.
The Foundations’ stated position is that this is a temporary setback and it doesn’t make sense to act preventively. Maybe. But you plan for the downside, not the upside. That means having a clear breakeven calculation: at what ETH price and staking APR does the protocol cover its costs? A concrete contingency plan if that price doesn’t materialize within 12-18 months. And an answer to whether allocating treasury reserves to token buybacks is responsible before those first two questions are resolved.