Lido to prepare for the bear market

Crypto markets, as volatile as they are, seem to be fluctuating towards the bear market lately. The Lido Treasury, while holding significant funds, is holding those in LDO (~177m LDO at the time of writing), ETH (20,940 ETH at the time of writing) & stETH (3,705 stETH at the time of writing). While LP incentives & referral bonuses are nominated in LDOs, most of the other operational expenses are nominated & performed in stables (RCC payments & most of the LEGO grants). Have the ETH/USD price fall, the DAO would have significantly less resources for operations, and for the unpredictable time so.

We propose to sell 10,000 ETH of Treasury funds to DAI. This should cover about two years for 50-people team & ops expenses of the protocol maintenance budget. With the current staking APY & daily fees numbers that’s the amount Lido DAO would make up in stETH in about a year (~25 ETH / day in rewards for Lido DAO Treasury).

ETH was obtained by the Treasury during Treasury Diversification event, granting funds for the protocol development and maintenance. As possible alternatives, choosing LDOs for the sale would be adding unnecessary price pressure, which isn’t desirable. Treasury stETH funds are accruing staking rewards, so it makes sense to hold those as well.

Community feedback is highly desired! We’ll be looking into starting the snapshot vote on the matter by next Mon, June 6.


Given Lido doesn’t have a Treasury function currently, diversifying 50% of ETH in treasury to stables feels a bit knee-jerky, especially given how late it’s being proposed. Sounds like something we should be looking to outside experts (e.g. Karpatkey / other treasury management service providers) for at least a double-check on this and also potential strategies for how this DAI may be allocated so that it is optimally used (e.g. deposited in part to protocols for supply APR).


To be frank, this was a completely missed opportunity during last years bull run. Its disappointing that it took this long to recognize the impact that a lack of treasury management has on the financial health of Lido. 12 -24 month stable coin runway is mandatory for cashflow negative organizations, especially in this kind of environment.

However, as @Izzy pointed out, this does feel like a knee jerk reaction. We need a solid plan for treasury management. Among many things, we need to explicitly:

  1. Identify total burn rate across all wallets (I have a dune report that should be ready this afternoon)
  2. Identify minimum DAI / stable balance to fund operations
  3. Identify optimal token to fund each function (it feels like there is a half hazard process of using LDO as the default)
  4. Create a process for creating liquidity / stables, which is probably not liquidating 10k ETH on the open market at once.
  5. Create a treasury allocation process
  6. Create a feedback loop to cycle through 1-5 monthly

I propose we engage a group that focuses on treasury management full time for at least an initial consult.

I should also have something closer to full financial reporting in the next week or so, which would go hand in hand with making an intelligent decision here.


A proposal of this magnitude requires data and thoughtfulness prior to voting or execution IMO. Few questions that can help aide the community in the decision:

  • Do we have data on the current burn rate / runway?
  • How are teams currently funded (split of DAI/LDO/ETH)?
  • What amount of stables are left in the treasury? It sounds like we’re selling ETH for stables as needed to pay people which is a very risky strategy
  • Do we have any financial statements/dashboards?

In addition to the above, I would not include LDO tokens as part of the treasury - this is common practice in corporate finance and something I find quite odd in web3. Regarding why, I’d recommend reading @Hasu’s article covering the subject..

Until the above questions are answered, we’re simply guessing. I’ll start hacking something together with @McNut and my team this weekend.


First of all, I’m not sure whether the team’s salary should be paid by DAO treasury. There is 15% of the $LDO total supply allocated to “Founders and future employees”. Did I misunderstand those tokens’ usage?

I’m also not sure whether now it’s the right time to make a $20m deal at a time. If the purpose is just for operations expenses, there are some other options for us.

  1. Buy $stETH with $ETH while there is a discount, and then paired with $ETH as an LP on Uniswap v3 or other DEXs. We can use the trading fees for operation expenses.

  2. As I have proposed in another proposal, we can directly invest in other ecosystem related projects, which can generate cash flow for DAO treasury to support operation expenses. In the case of Balancer, we may provide liquidity on wstETH-ETH pool & LDO-WETH pool, invest in BAL-ETH pool and locked for a fixed period of time. It can also bring cash flow for DAO treasury in much minimum assets selling risks.

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This is the equity intended to incentivize devs to work further, a success package. That doesn’t discount the fact that other newer members will be likely getting theirs from the DAO (advisors, etc.) as well as current members will need to continue paying for daily expenses. And no, they can’t be continuously selling their stake (LDO) in the protocol, because that’s a long-term package (different purpose).

Both of the options suggested do not seem to adhere to the purpose of the OP post of diversification (not that I agree with OP per se though). Meaning that the farming & other opportunities suggested are only making the treasury double down on ETH price exposure as well as possible IL in the proposed LDO-WETH pool. Anyway, just wanted to point this out.

Overall, LIDO likely doesn’t suffer from lack of funding or lack of $$ resources afaik, so the suggestion does indeed feel like a knee-jerk reaction. Of course, the market can be bearish for a couple or more years to come, but even then - the treasury would be able to finance things as normal. It seems to be too late to think about such diversification to USD, given that the protocol is already in the territory of making $ as well as possibly getting grants if needed to be, and can also finance itself with another round if absolutely required to.

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Thank you for the comments & proposals! There’s no good way for the DAO to move forward without community input, so the feedback is much, much appreciated.

As the timing is of essence, I’d say that we should consider securing the stable funds for Lido protocol ops and building proper Treasury Management as two different motions. This post is devoted to the first one.

My take would be that the current market situation calls for “stable-diversification” to secure operational expenses for the protocol maintenance in worst-case scenario.

Treasury Management is highly desired function for any DAO, but it’s not something easily obtainable. As with the function vital to long-term DAO operation, it seems like having a dedicated in-house team working on it would be the best here. Unfortunately, it’s not something we have been able to dedicate resources just yet. We’re reaching out to Kapratkey and looking for alternative proposals, but 1) there must be a strategy regarding Treasury Management (one-off proposals & actions don’t quite cut it); 2) it’s something requiring quite the time and consideration for the DAO to sign the agreement with any specific firm on any specific terms.


Timing-wise, I do think there’s sense in separating 1) making sure we have 12-24 months of stables runway for ops; 2) building out the sensible Treasury Management strategy & executing on it. That being said, we’re reaching out to Karpatkey & looking for other options as well.

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  • Should note that not all the maintenance costs are financed by the DAO currently & can be effectively estimated with on-chain data.
  • I’d argue that the more ops can be founded by the protocol revenue the better. Currently those almost can fund RCC (salaries & marketing expenses, basically), but can’t take LEGO in (both rough calculations).
  • Again, I feel like there’s a value in having dedicated in-house team to work on Treasury Management, though getting support & insight from pro company may be very beneficial.
  • I can’t not mention LDOs in Treasury (it’s most of the balance you would see on etherscan), but am 100% sure we shouldn’t use those for ops funding.
  • Lido DAO doesn’t hold stables at the moment; funds are either in ETH from the Treasury Diversification, stETH from fees or LDOs from initial distribution.
  • Currently not all ops costs are funded by the DAO, so there’s no easy way to compile the full data.
  • Would argue it’s the most sustainable for the DAO to fund DAO protocols maintenance, but — again — that’s a separate theme for discussion. Should note that some teams are funded by the DAO behind RCC already.
  • LPing (or any other farming on the DAO funds) requires active Treasury Management, and should be a theme for another discussion, I believe.

The protocol fees are in stETH, so the funding for $-nominated ops depends on the ETH/USD rates. As noted, by the current staking APY & protocol TVL, the fees Lido collects should make up the sum in ETH in about a year.

Agreed with the sentiment that selling 50% of the ETH in treasury is quite drastic and should be considered carefully. A few questions I’d like to see addressed:

  1. What exactly are the groups which require funds, and how much fiat do they require on a monthly basis?
  2. What is the status of funds raised by the Paradigm and a16z investments?
  3. Are there ways to also sell LDO or other tokens to mitigate the impact on the ETH portion of the treasury?

Additionally, I would consider holding >1 stable coin (at least DAI and USDC, IMO, but probably others such as USDT, RAI? in smaller amounts) to increase diversification.

Finally, if some expenses are very urgent, it might be worth breaking those out explicitly from the 10,000 ETH.


Paradigm investment is the 20k ETH sitting in Lido treasury. My understanding is that A16Z investment was private/secondary sale of tokens from existing investors, so proceeds did not go to Lido DAO.


hey tim,

we get it, u received ur LDO for free and u dont care about more sell pressure as does everyone who seems to have received a $1 billion - $5 billion valuation on fully unlocked LDO pretty much immediately.

i generally find it incredible how poorly the economics of this project is managed. like who in their right mind did not sell a majority of their bags in january on the first crash? how many noobs are here, working for this project, lol.

note i sold no LDO, but did sell all my eth and solana. only accumulating more LDO even though its cucked due to wormhole deployer 4, amongst other heavy sellers. like why was there no lock up?

i get it, the project is full of genius autists, but damn the economics of this project seem to be the classic founders, etc. dump on community members … and now w the proposal to sell all this eth halfway into the bear (yeah its prob gonna go down more , LOL !) is rly amateur hour … like why now and why not in january? is lomashuk checked out? never rly see him on these message boards …

We can definitely at least get a 2nd opinion for the very specific task of “selling 50% of treasury to stables” right now, at this moment, which is completely independent of an overall Treasury management strategy.


Hey Kadmil, my name is Yimang and I’m the product manager of Solv Protocol.

It seems like that you’re concerning about the financial situation of Lido. I believe Solv can help you get through this difficult time with our Bond Voucher solution.

Since launched on Feb this year, Bond Voucher has already successfully raised $1M for Unslashed Finance, $3M for Perpetual Protocol, $2M for Strips Finance and $11M for iZUMi Finance. Our technology enables capital efficient financing methods and is able to offer you solutions such as zero-coupon bond and convertible bond.

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“We propose to sell 10,000 ETH of Treasury funds to DAI. This should cover about two years for 50-people team & ops expenses of the protocol maintenance budget.”

← wtf are 50 people doing? not one of them thought, hmm crypto is really volatile, what if eth crashes, will that cause a problem for us?

is it possible to vote to fire some people for managing the treasury so poorly? you should actually state why you should not be fired for such negligence

73 million usd in eth was raised at appx 4,000 usd per eth. there are leaders to this project and no one thought wow maybe we should cash some out to guarantee our run way b/c ya know crypto is historically extremely volatile?

im sorry but thats the dumbest shit ive ever heard … whats this 2nd opinion gonna do? lol, what magic are u expecting them to say

u guys fucked up and u should be held accountable. this is not some kumbaya shit. i literally have millions of USD in LDO token, that i bought all from the market and u guys act like a bunch of amateurs for putting the project at risk like this

you are now being compared to this: Substratum price, SUB chart, and market cap | CoinGecko

thank you @kadmil for pointing this out. whoever fucked up should face consequences.

side note: i’ve spent a lot of time over the last few months putting a token economics proposal together … really feel deflated now … the incentives of this project are terribly misaligned. it feels like its the cool kids at the high school table sometimes all cheering for each other

notable lido fuck ups:

(1) Terra (lol, Terra is top 5 worst thing to ever happen in history of crypto, so yeah not great that our level of autism could not detect the low quality ponzi nature of this … feels like jump crypto has too much influence over the project)

(2) getting in bed with wormhole deployer 4 aka jump crypto - total fuckin mercenary that does not gaf about the long term of ldo … they have their daddy’s and bottom line to meet. note that crypto is about sovereign individual.

(3) treasury management

notable ldo wins:

everything else yay

i am not selling.


also, id like to add that i do not think arthur0x should get his lido back <— if he does get it back, add this as ldo fuck up #4

if i lose my ldo, will i get mine back?

if ur not a psycho about security, wtf r u doing

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