[Hasu's GOOSE-2 Submission] A Product Line Approach to Grow Lido’s Staking Ecosystem

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Thank you for the proposal and the meaningful discussions so far.
Considering the significance of determining Lido DAO’s direction for at least the next year, we believe it is essential to take sufficient time before reaching a conclusion. Therefore, we propose delaying the vote.

Regarding @Hasu 's proposal, we outlined our thoughts below following @Jenya_K 's formatting.

Goal #1: Lido Has Effective and Decentralized Governance
2025 Main Focus: Strengthen LDO’s Role in Governance

Our take: We support exploring the potential LDO fee switch, but we believe there are additional challenges to address before the fee switch becomes an available option.

Rationale:

  • We understand the need to strengthen the alignment of Lido DAO’s success and LDO holders’ success.
  • However, it is very unlikely that we can implement a new token design given that Lido DAO’s profitability isn’t very high at the moment, which can be found in this dune dashboard.
  • It will require some time for Lido DAO to have better profitability after releasing new product lines.
  • Meanwhile, there are several things that can be improved such as increasing quality contributors and improving transparency of organizations under Lido DAO (i.e. committees).

Goal #2: Lido Attracts the Best Validator Set in the Market
2025 Main Focus: Establish an Open Market for Validators

Our take: We support Hasu’s idea.

Rationale:

  • The importance of both Lido’s profitability and enhancing decentralization are significant.
  • It is necessary to have an appropriate incentive design to achieve the best balance of both above.
  • Additionally, it is desirable to have it programmatically implemented as it can potentially be utilized with staking modules that don’t exist today.

Goal #3: stETH Is the Most Used Token in the Ethereum Ecosystem
2025 Main Focus: Expand stETH’s Ecosystem with a Diverse Product Line

Our take: We support Hasu’s idea.

Rationale:

  • we agree that the LST market itself has reached a certain level of maturity.
  • Considering the current state of the Lido DAO and the concerns around the MVI discussion, pursuing higher profitability is mandatory.
  • Providing new staking-based products, especially supporting institutions staking, is an area where Lido can hold a competitive advantage.
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43

We have voted in support of the submission and want to emphasise the importance of defining what success looks like with measurable metrics and clear targets at all levels of the implementation (goal, vision, results and initiatives). This is just the start.

Implementing LDO fee switch mechanism make sense as shareholder (and governance efficiency) incentive, but its not a solution to the underlying business performance, which must come first. We share the sentiment from other contributors on the DAOs execution and go to market (GTM) speed and agility. This should be a top priority across the three goals - not just within governance.

We look forward to participating and contributing to specific streams and projects together with the rest of the community!

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Lido is a decentralized organization that offers a liquid staking solution for Ethereum, allowing users to stake their ETH and receive stETH tokens in return. This system is designed to provide a more accessible and user-friendly approach to staking, as it does not require users to lock up a large amount of ETH or run their own nodes .

Traditional institutions, when considering staking targets, often look for entities that they can hold accountable in case of issues. With Lido, the decentralized nature of the organization means that there is no central authority to point to in case of problems. This is because Lido is governed by the Lido DAO, a decentralized autonomous organization, which operates through token holder votes and is not controlled by any single entity or group .

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The lack of a centralized point of control can be a deterrent for traditional institutions when choosing staking targets. They may prefer more traditional, centralized Staking solutions，where they can identify and engage with a specific entity responsible for the management and security of thestaking solutions. This preference stems from the need for clear lines of responsibility and the ability to pursue legal or other remedies in case of any issues that may arise.

Furthermore, the decentralized nature of Lido also means that it is more resilient and less susceptible to single points of failure, which is a key advantage in the blockchain space. However, for traditional institutions that are accustomed to dealing with centralized entities, this can be a significant departure from their usual practices and can pose challenges in terms of risk management and governance.

In summary, while Lido offers a decentralized and accessible staking solution with stETH, its lack of a centralized authority may deter traditional institutions from choosing it as a Staking target due to concerns about accountability and risk management

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I think so, Lido needs to have the ability to attract agencies.

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Large institutions choose those that can be directly pledged, not a third party, for security. However, there is LDO in the Grayscale Fund, is it possible to directly choose LDO to pledge?

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Thanks @hasu for the new iteration of GOOSE!

I’ve voted in support of the submission, and here are my 2c:

The initial iteration of GOOSE and ReGOOSE focused on decentralisation of stETH (outcome: CSM, DVT modules) and Lido as a protocol (outcome: delegation), and the Lido contributors had done a great job achieving those, and it’s great to see new goals set forward. With the ideological priorities met (decentralisation), the new goals are rightly more commercial, and I’m very excited for implementation of 1. different product lines for stETH, and 2. LDO alignment.

As for 1, would love to see focus and preparation for staking ETFs being approved, and engaging with ETF providers if it’s not already being done. Non-staking ETF made little sense (it’s like investing in REITs but they don’t pay you yield) and probably limited some of potential inflows to the ETFs (<2% of ETH supply vs. Bitcoin ETFs which now hold >5% of bitcoin supply). Lido has obvious advantage of being market leader (by far), but very strong disadvantage of actually being decentralised (and thus lack of ‘blameability’ vs. sth like Coinbase staking). The new ‘institutional stakers’ verticals would be part of the solution. I understand that GOOSE focuses on ‘what’ vs. ‘how’ these goals should be met, and that these things are probably already being done behind the curtain :slight_smile: Another priority is integration into major CEXs and prime brokers as collateral.

As for 2 (LDO alignment), increasing LDO alignment ($LDO) as this is probably the single best way to increase awareness (of Lido) and engagement, which has largely been missing this cycle.

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Hi there!

We celebrate the discussions on this GOOSE round and look forward to see the close-ups and outcomes of this trully productive conversation. We’ve decided to vote for the adoption of the goals as per the reasons outlined in our rationale.

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Thanks @Hasu for the proposal

TokenLogic is definitely in favor of this proposal as GOOSE-2 demonstrates a clear understanding of the challenges facing Lido and presents thoughtful solutions to navigate them.
However, TokenLogic believes that the proposal could benefit from more explicit flexibility, particularly in the design of the validator marketplace. By avoiding rigid prescriptions, Lido can maintain the agility needed to address evolving market dynamics. This will definitely be discussed in the following governance topics. Furthermore, TL supports @BlockworksResearch suggestion to incorporate a dedicated focus on custody providers as a critical target market. Tailored solutions for institutions, such as enhanced compliance features and governance support, would address existing gaps and strengthen Lido’s competitive positioning against centralized exchanges, on the staked ETH ETFs.

Lido must ensure that the pursuit of institutional capital and APR competitiveness does not undermine its core values. TL encourages further exploration of how LDO can be more directly tied to protocol success, as this would attract long-term holders who are aligned with Lido’s mission.

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For traditional institutions that resemble BlackRock in their operational approach, embracing a decentralized organization like Lido for staking might indeed seem challenging due to the lack of a centralized point of contact in case of issues. However, there is a potential strategy that could facilitate their adoption of Lido’s services: encouraging these institutions to hold a stake in Lido, thereby aligning their interests with the platform and increasing their influence over the governance of the Lido DAO through the LDO token .

By holding a significant share of Lido’s LDO tokens, traditional institutions would not only have a vested interest in the success and stability of the platform but also gain direct involvement in its governance. This would address their concerns about accountability and control, as they would be part of the decision-making process that shapes Lido’s direction and risk management strategies. LDO token holders are the de facto managers of the platform, controlling the Lido DAO, its treasury, and the suite of contracts associated with it .

The benefits for traditional institutions are manifold:

  1. Direct Influence: By holding LDO tokens, institutions can actively participate in the governance of Lido, ensuring that their interests are represented in the platform’s development and operations.
  2. Risk Mitigation: As stakeholders, these institutions can work within the Lido DAO to implement risk management strategies that align with their own risk profiles, thus mitigating the risks associated with decentralized platforms.
  3. Alignment of Interests: Holding LDO tokens aligns the interests of traditional institutions with those of Lido, ensuring that the platform’s success is directly tied to their own financial gains.
  4. Enhanced Trust: Participation in the governance process can help build trust in the platform, as institutions would have a clearer understanding of how decisions are made and how risks are managed.

For Lido, this approach offers several advantages as well:

For Lido, this approach offers several advantages as well:

  • Institutional Adoption: It could lead to increased adoption of Lido’s staking services by institutions, which could, in turn, boost the platform’s credibility and market share.
  • Capital Infusion: The purchase of LDO tokens by institutions would provide a capital inflow, which could be used to further develop the platform and enhance its services.
  • Diversification of Governance: It would bring a diverse set of stakeholders into the governance process, potentially leading to more robust and resilient decision-making.

In conclusion, encouraging traditional institutions to hold a stake in Lido through LDO tokens could be a win-win strategy. It would provide these institutions with the governance influence they seek while also bolstering Lido’s position in the market and enhancing its governance structure with the inclusion of experienced financial players.

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Snapshot vote ended

The GOOSE 2024 cycle: Lido DAO goals for 2025 Snapshot vote concluded!
The results are:
Adopt Goals: 57.8M LDO
No action: 86 LDO

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Hi @Hasu!

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.

From Product to Product Line:

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
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I would like to ask if the United States stakes ETH through an ETF, will this have an impact on Lido’s business, and will it cause Lido’s ETH to outflow?Is allowing eth staking good news or bad news for Lido?

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We can expect a lot money to flow into staking from ETFs, with possibly specific demands for the node operation/compliance/insurance setups.

Right now, Lido is offering a one-size-fits-all solution with the deepest liquidity and best integrations. This was the perfect product in a world where staker demands are relatively homogenous, and Defi is growing.

But to successfully win in a more institutionalized market, the expectation is that Lido protocol must become more customizable for stakers while maximally retaining its existing strengths (security, liquidity, and integrations).

This is the main logic behind the new strategy.

6 Likes