Lido Referral Program

Proposals
22

Thank you very much for your comments and questions.
Updated text of Proposal given below.
I would like to discuss it with you.

Motivation

Word-of-mouth marketing and various reward programs (e.g., airdrop rewards, referral rewards) are highly effective growth marketing techniques designed to boost brand awareness and adoption of decentralised distributed ledger protocols. Moreover, the Program will encourage software developers of wallets and other DeFi protocols to promote our staking protocol among their users, and will positively impact the number of active stakers, and subsequently, the amount staked with Lido.

Conditions

The following conditions are proposed:

  1. Users are given the ability to generate a unique referral URL that is specific to their Ethereum address.
  2. A Referrer will receive LDO as a reward after her/his/its Referee (new user) staked at least 1 ETH using the unique referral link.
  3. The Lido Referral Program does not have any timeframe. The Program ends when there are no more tokens in the Reward Pool (i.e., the total amount of LDO tokens that can be distributed to participants of the Program) or when the DAO makes an active decision to cancel it.
  4. The DAO can cancel or pause the Program at any time.
  5. The DAO determines the LDO Token Reward.
  6. The DAO determines the size of the Reward Pool.
  7. The DAO can at any time change the LDO Token Reward and the size of the Reward Pool.
  8. The DAO can at any time change the way the Lido Referral Program is implemented.

Proposed LDO Token Reward and Reward Pool

The proposed size of the Reward Pool is 15m LDO. The proposed LDO Token Reward is 15 LDO for 1 ETH staked. It means that if a Referee stakes 10 ETH, her/his/its Referrer is rewarded with 150 LDO Tokens.

After careful consideration, it was concluded that any limits are bad options for optimal to achieve our goal of attracting more users and capital to Lido. Currently, there is no point in having limits per wallet/participants as such a limit will be quite hard to impose. It may disincentivise active users to participate in the Referral Program.

Expected Results and Evaluation of the Results

Based on the analysis of various rewards programs conducted by DeFi protocols, it is expected that the Referral Program will help to attract at least 130,000 ETH in the first six months of the program in exchange for 1,950,000 LDO. However, these estimations are not 100% reliable and regular analysis of the success of the program will be conducted.

We consider that the first month is a crucial point in evaluating the Program’s effectiveness, and if we fail to attract more than 20,000 ETH, we will have to rethink the LDO Token Reward. Moreover, an additional metric for the success of the programme is our effectiveness in identifying and addressing abusive behaviour (see Point 4 of Section Implementation below).

Reports will be prepared, and we will together evaluate the success of the Lido Referral Program and decide whether to continue, amend or stop it.

Implementation

There are many ways in which the Lido Referral Program can be implemented. An example of one of the most cost-efficient options is provided in this proposal. Nevertheless, the DAO community is welcome to share their opinions regarding alternatives supported by valid arguments.

The following implementation of the Lido Referral Program is proposed:

  1. A participant gets a unique referral link. It will also be possible to indicate the address during an interaction with the smart contract. Developers of protocols and wallets, please, read the following two guides.

  2. Guide for protocols

  3. Guide for wallets

  4. 15 million LDO tokens held in the DAO Treasury will be reserved for the purpose of the Lido Referral Program.

  5. Every two weeks from the start date of the Program after the voting necessary to move some part (200 000 LDO, for example) of LDO tokens, Rewards will be transferred to a dedicated blockchain address* and, then, subsequently, within 7 days to Referrers using the L2 Ethereum scaling solution Arbitrum.** It means that there are about 26 Reward Calculation Periods and 26 Pay-out Periods within one calendar year*** as the table below illustrates.****

Reward Calculation Period
[01.07.2021-15.07.2021]

Pay-out Period
[15.07.2021-22.07.2021]

  1. In order to ensure that the Referral Program can successfully achieve the purpose of developing the ecosystem and attracting new members to our community, it is suggested to have rules that will help to limit abuse and misbehaviour. Namely, participants/addresses involved in abusive, incorrect, suspicious behaviour that is against LIDO DAO values and goals will be excluded from the Program and will not be entitled to LDO Rewards, including but not limited to the following situations:
  • Participant/Address is involved in automatic arbitrage trading also known as “bots”;
  • Participant/Address directly or indirectly worsen the ETH:stETH peg in incentivized liquidity pools such as, for example, Curve ETH:stETH liquidity pool;
  • Where is there is a suspicion that staked ETH are proceeds of crime (e.g., hack).*****

Reports showing the distribution of LDO will be regularly published to ensure transparency of the Lido Referral Program.

  1. If for whatever reason there are any errors in the calculation or transfer of allocations of the Rewards to any Referrer, the error can be rectified in any suitable way (e.g., if the Referrer received more Rewards than it is supposed to, he would not receive Rewards for further referrals until the mistake was corrected).
  2. We want to underline one more time that DAO can at any time stop the Lido Reward Program, amend the way it is implemented, including Proposed LDO Token Reward, Reward Pool.

*Tokens for further distribution will be moved to this address only after on-chain voting. Currently, there are no technical possibilities to allow the DAO to control this wallet directly. Hence, I suggest nominating me as a controller of the distribution wallet on behalf of the DAO. If somebody has a suggestion of a reputable member(s) of the Lido DAO community who could take control over the address, please, list your candidates in the comments below.

**In the future, the Lido Referral Program may be implemented utilising another cost-efficient solution (e.g., Optimism) in addition to Arbitrum or instead of it. Our community will be updated on any relevant changes to the implementation of the Program. If you have other ideas on how the Program could be implemented, please indicate this in the comments below.

***There is no guarantee that the Lido Referral Program will last for one year as the DAO may decide to cancel the Program at any time or the Reward Pool may be exhausted within less than twelve months.

**** The table is provided for illustrative purposes and it doesn’t include all possible Reward Calculation Periods Pay-out Periods.

***** You are welcome to suggest more examples of behaviour that can be considered abusive and not contributing to the development of our ecosystem.

If the proposal is approved, there will be a detailed FAQ explaining all aspects of the Lido Referral Program.

Implementation date

If this proposal is successfully approved, the Lido Referral Program will start on 1 July 2021.

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