Governance Grove Delegate Thread

Delegate Platform
2

Hi everyone, kicking off our first post here by migrating our voting history and rationale from our previous delegate thread here.

Batch voting date: 3rd November 2024

Proposal: Establishing the Network Expansion Committee
Vote: For
Voting Rationale: We support the proposal to establish the Network Expansion Committee (NEC) for Lido DAO as it provides a formalized structure for managing the expansion of (w)stETH to new networks while addressing key risks associated with cross-chain operations. The NEC introduces a transparent and accountable framework for recognizing (w)stETH bridging endpoints and denominations, replacing the informal Network Expansion Workgroup with a more secure and flexible governance mechanism.

The proposal addresses the following critical considerations:

1. Streamlining Governance:
The NEC’s streamlined decision-making structure improves adaptability when expanding to new networks while maintaining accountability to the DAO, so that network expansions are both strategic and transparent.
2. Operational Efficiency and Risk Mitigation:
A well-defined NEC reduces reliance on multi-sigs and unstructured workgroups, mitigating risks of miscommunication and delays. Its formal framework ensures that network expansions align with Lido DAO’s security and decentralization principles, with unanimous approval required for NEC decisions (4/4 vote) and an override mechanism via DAO vote.
3. Cross-Chain Governance Project Comparisons:
The NEC focuses specifically on (w)stETH’s bridging and network expansion needs, while the Wormhole Multigov system offers cross-chain governance execution capabilities. We recommend exploring how NEC processes could integrate with systems like Wormhole Multigov for enhanced cross-chain governance execution with formalizing bridging endpoints, allowing flexibility in adopting multigov solutions where appropriate.

By supporting this proposal, we help enable a secure, transparent, and adaptable approach to Lido’s network expansion strategy, safeguarding the protocol’s long-term success and decentralization.

Proposal: Reevaluation of Lido on Polygon state
Vote: Sunset Lido on Polygon
Voting Rationale: As described in GOOSE and reGOOSE, we agree that having a laser focus on Ethereum is the most sustainable path forward and one with the highest operational leverage for the Lido protocol.

One other point to consider for future pilots for new network expansions is that newer protocols will have an edge over Lido because they will be able to incentivise TVL using token issuance. This is in contrast to LDO, where the majority is already in the hands of the community.

This again highlights that the best play is to focus on the Ethereum ecosystem.

If we do want to explore beyond the Ethereum ecosystem however, we suggest future pilots to adopt smaller-scale, milestone-based approaches to test feasibility and ROI before committing significant resources. This would mitigate risks, provide better cost control, and allow the DAO to pivot more effectively based on measurable results.

Proposal: Should Nansen continue in SDVT following the acquisition of Stakewithus?
Vote: For
Voting Rationale: Congratulations to @Nansen on the acquisition of StakeWithUs, a non-custodial staking provider backed by SGInnovate. Noting the evaluation by the LNOSG, we are confident of Nansen’s ability to continue their high performance in the Simple DVT programme. Further, the operational segregation between StakeWithUs and Nansen’s other activities ensures that the performance and security requirements critical to the Lido DAO’s SDVT can be met.

Proposal: Should Alchemy continue in SDVT and LoP following the acquisition of Bware Labs?
Vote: For
Voting Rationale: We support continuing Alchemy’s participation in SDVT and LoP programs following its acquisition of Bware Labs. The LNOSG review confirms that the transition does not introduce operational risks or changes that would compromise performance, decentralization, or security.

Proposal: Should Pier Two continue in the Curated Module Set following the acquisition of Numic?
Vote: For
Voting Rationale: The proposal to allow Pier Two to continue as a Node Operator in the Curated Module Set after acquiring Numic is supported by several key factors. The acquisition strategically combines Numic’s operational expertise with Pier Two’s resources and commitment to achieving advanced security certifications such as ISO 27001:2022 and SOC-2. This integration enhances infrastructure quality and compliance within the Ethereum ecosystem, strengthening both entities’ contributions to Lido.

Additionally, the Lido Node Operator Sub-Governance Group (LNOSG) has reviewed the acquisition and proposed a structured onboarding process, which includes a testnet trial run followed by a gradual mainnet ramp-up to identify and address any operational issues early.

Proposal: Hasu’s GOOSE-2 Submission A Product Line Approach to Grow Lido’s Staking Ecosystem
Vote: Adopt Goals
Voting Rationale:
We support the adoption of the goals outlined in @Hasu’s GOOSE-2 submission.

From Product to Product Line:

This is indeed a thoughtful strategy that adapts to the reality of the market demand observed over the past year and we are glad that the importance of a separate product line catering to institutional stakers is being recognised.

I personally witnessed the challenges of institutional adoption firsthand in my practice. Solutions like stETH and Lido Institutional offer clear benefits—deep liquidity, diversification, and superior rewards—but adoption often stalls due to regulatory barriers, such as the need for a known counterparty responsible for custody and governance. Another concern is the classification of staking rewards, which are distinct from speculative products yet often misunderstood. Proactively educating policymakers to view staking as a technical service, not a financial product, is important. However, this process requires sustained advocacy over multi-year cycles, with periods of slow groundwork followed by bursts of rapid action when consultations arise.

To drive institutional adoption, we must recognize that the market cannot adopt a one-size-fits-all stETH given its diversified needs. Expanding into the other identified beachhead markets leverages stETH’s strengths as high-quality collateral while addressing unique priorities like compliance, risk-adjusted returns, and capital efficiency.

A Market for Validators

This approach fits well with the overall direction that Ethereum researchers are taking–e.g., Rainbow Staking, Orbit SSF–that aims to bifurcate the duties more suited for professional node operators vs solo stakers, and incentivising them accordingly.

As such, we will likely be one step ahead of the competition by investing resources into building this out now.

LDO: More than Governance

While we are supportive, we’d like to voice out a few points for consideration.

Tying LDO more directly to protocol revenue will improve alignment of LDO holders with the protocol by increasing their skin in the game. However, implementing a straightforward “fee switch” would also expose the LDO token to valuation scrutiny through traditional financial metrics.For example, the market capitalisation of LDO to revenue will currently be 133x if we assume 1% of stETH fees go to LDO holders due to a “fee switch”, which could be perceived as overvalued

As such, it would be interesting to explore new use cases for LDO within the new stETH product lines. E.g., Stake LDO to vote for vaults that one thinks will generate more revenue for the DAO and receive a larger share of DAO revenues from that vault.

This achieves 2 outcomes:

  1. Reduce sell pressure: LDO is not sold if it is staked
  2. Efficient capital allocation: TVL can be automatically balanced across vaults

Batch voting date: 18th December 2024

  1. **Vote #182 (Onchain)**

    • Summary: This vote was republished due to a lack of quorum for Vote #181, which covers the same proposals.

    • Vote #182 consists of 3 proposals.

      • Change Easy Track limits for PML & ATC: Pool Maintenance Labs (PML) & Argo Technology Consulting (ATC) are entities that service the Lido DAO. This proposal optimises the budget allocation to each entity via Easy Track in order to achieve the goals set out in the **[EGG] st2024 v2: Continuity Grant Funding to Achieve GOOSE Goals.**
        • PML: Decrease from 6M to 4M USDC/USDT/DAI per quarter
        • AGC: Increase from 1.5M to 7M USDC/USDT/DAI per quarter
      • TMC-4: Increase Stonks execution limits: This is a treasury management proposal for the Lido DAO to increase the amount of stETH (from 9000 to 12,000) they can convert into stablecoins in an automated manner to fund operational runway as well as grants. The algorithm proposed is to raise greater than or equal to 9mos of runway each time the stablecoin balance is less than or equal to 2mos of runway
      • Simply Staking Node Operator Reward Address change: This proposal requests to update the reward address of a node operator in the Lido Curated Set. The ownership of the new reward address can be verified using the links in the post itself.

    • Vote: While we did not vote in time during the Main Phase, we will also not vote “No” in the current Objection Phase to signal our support for these 3 proposals.

    • Rationale:
      a. Change Easy Track limits for PML & ATC: Updating the limits of the Easy Track limits to each entity servicing the DAO is a necessary exercise to reflect current needs and goals. While there is a significant increase in Easy Track limits for AGC of 5.5M USDC/USDT/DAI per quarter, it is also offset by a reduction of 2M to PML. This net increase of 3.5M, however, does not increase the overall budget allocated for the period.
      b. TMC-4: Increase Stonks execution limits: Conversion of surplus stETH into stablecoins in an automated manner with simple and clear rules is an effective way of treasury management. Tying the execution algorithm to operational runway instead of market timing is also prudent.
      c. Simply Staking Node Operator Reward Address change: We found no issues with the data submitted for the change of reward address request.

  2. **Extend On-Chain Voting Duration (Snapshot)**
    • Summary: Tané and Lido DAO Ops contributors are proposing to extend on-chain voting duration for better participation and security:
      1. Main phase: 48h → 72h;
      2. Objection phase: 24h → 48h.
    • Vote: Extend duration
    • Rationale Increasing the on-chain voting duration does not significantly slow down the operations of the DAO and allows voters more time to make informed decisions.
  3. **Lido Alliance Grant Proposal (Snapshot)**
    • Summary: The proposal requests 300k DAI to continue the activities of the Lido Alliance BORG through 2025, aligning with GOOSE-2. The key objectives are to Expand Alliance to 8+ total members + support growth and adoption of stETH within existing Alliance set.
    • Vote: For
    • Rationale: The budget requested for 12 months of 2025 is only 50k DAI higher than the prior annualised half-year budget of 250k. Given the goal is to more than double the number of Alliance members + drive growth of stETH adoption within the existing Alliance set, we feel that the budget requested is reasonable.
  4. **Update Lido on Ethereum Standard Node Operator Protocol - Validator Exits (Snapshot)**
    • Summary: The current Validator Exits Policy is outdated as it does not reflect protocol improvements made in Staking Router (SR) 2.0, which now includes the Simple DVT and Community Staking Modules. Hence, an update to the policy is requested to standardise the process across all 3 modules today.
    • Vote: For
    • Rationale: It is important to ensure that validator exit policies remain relevant and transparent. Standardisation across modules will also lower operational overheads of the DAO.
  5. **CSM: Enable Permissionless Phase and Increase the Share Limit (Snapshot)**
    • Summary: This proposal covers the transition of CSM into the fully permissionless mode alongside a share increase from 1% to 2% to enhance decentralisation of the Lido node operator set.
    • Vote: For
    • Rationale: Despite only launching for less than 2 months in a restricted mode, 0.56% of protocol TVL has been occupied by the module. Also, given that the number of new CSM operators have started to slow down, we agree that we may have reached the saturation point of the current Early Adoption List. Hence we support the transition of CSM to a fully permissionless mode along with the share limit increase. Additionally, we advocate for continued evaluation of safeguards that can be implemented to prevent centralisation of the module. Full rationale here.
  6. **[EGG] Multi-EGG Continuity Grant Funding (Snapshot)**

    • Summary: This is a continuity grant funding for the Lido Core Contributors to advance towards Hasu’s GOOSE & reGOOSE goals, preparation for GOOSE-2, completing the Dual Governance implementation, and enabling permissionless entry for the CSM. The total grant funding requested is $21.6M, broken down into:

      • 3-month 11.1M DAI grant for Lido’s Core Contributors Group
      • 6-month 8.5m DAI in grant continuity for Ecosystem Growth through Liquidity Observation Lab
      • 12-month 2m DAI in continuity for the Bug Bounty program

    • Vote: For

    • Rationale: The amount requested is inline with prior half-years, with similar scope and scale of deliverables. We also agree with the overall priorities outlined in this proposal around decentralisation (Dual Governance, Permissionless CSM), optimising liquidity (ecosystem growth grant), and security (bug bounty program).

      1. H1’24: 22.5M DAI
      2. H2’24: 24.6M DAI

      Additionally, we are advocating for a consolidated dashboard to track EGGs for more efficient evaluation by voters for future EGGs.