Horizontal Expansion - moving into new asset classes to add breadth, capture new demand, and diversify revenue streams.
In the long-term, this product line has potential to evolve into an integration layer for real-world finance platforms like custodians and banks looking to offer a wider range of DeFi products, e.g., lending markets.
This is incorrect, in my opinion. Lido’s advantage comes from its first-mover position and deep liquidity in the staking sector. Trying to expand into the broader DeFi space where large, established protocols with strong network effects and liquidity already exist(such as Morpho and Aave) would be inefficient. It would add unnecessary costs, complexity, and risks to the Lido brand. I think Lido Labs is overly optimistic about this mission.
I also believe the cost side creates a conflict of interest between the DAO Treasury and Lido Labs, since Lido Labs faces little downside if horizontal expansion fails. For this reason, these rules should be strictly followed to ensure development proceeds in the right direction:
They operate on limited resources and short validation cycles. Each experiment must prove real market traction before requesting additional DAO funding to scale.
The principle is patience and precision: no early large commitment of resources until a clear strategic wedge and credible path to dominance are identified.
Vertical Expansion should be the primary strategic path.
In crypto, market conditions can shift quickly. The DAO’s resources should be focused on preserving and strengthening Lido’s critical position as the main staking hub of the Ethereum ecosystem. All development efforts and any potential DeFi integrations should be built on top of the staking function.
stVaults and CSM are, in my view, the largest and most strategically correct moves in both the history and future of Lido.
Work on the GOOSE-2 ‘LDO Alignment’ goal continues into H1 2026.
NEST enables swapping stETH from the DAO treasury to buy back LDO from the secondary market.
Hasu clearly explained the purpose of this initiative in his post:
“LDO secures and directs the Lido protocol and its key resources.”
“By tying LDO more directly to protocol revenue, we can attract committed, long-term holders who are invested in Lido’s growth and success.”
The issue is that distributing revenue to all tokenholders through buybacks is far less efficient than distributing revenue only to tokenholders who delegate their tokens. Buybacks minimize the positive impact of revenue distribution and reward passive tokenholders who hold their shares on CEXs just as much as the committed tokenholders who actually help secure the protocol through governance participation.
DAO governance is still experimental, but Lido DAO is one of the leaders in this area. I hope it does not fall into centralization because a strictly decentralized governance structure would generate extremely positive long-term outcomes, just like the functional development strategies mentioned here.