# Lido to prepare for the bear market

**URL:** <https://research.lido.fi/t/lido-to-prepare-for-the-bear-market/2318>\
**Category:** Proposals\
**Created:** [June 3, 2022, 9:05am UTC](https://research.lido.fi/t/lido-to-prepare-for-the-bear-market/2318 "2022-06-03T09:05:46Z")\
**Posts on this page:** 1\
**Showing post:** 35

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**Author:** ![kadmil](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/kadmil/32/1958_2.png) [@kadmil](https://research.lido.fi/u/kadmil)\
**Post date:** [June 8, 2022, 7:24pm UTC](https://research.lido.fi/t/lido-to-prepare-for-the-bear-market/2318/35 "2022-06-08T19:24:48Z")

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Let’s do a short back-of-the-envelope analysis.

Holdings, income & costs:

1. Treasury holds notch less than 21,000 ETH & 3900 stETH.
2. Protocol revenue depends on Ethereum staking APR, protocol TVL & the protocol fee percent. Lido generates about 500 ETH/day in staking rewards, making it for 25 ETH / day in protocol fees (10% of the staking rewards, 50% of the fees), or 750 ETH/month, 2250 ETH/quarter, 9000 ETH/year. The TVL can’t get lower until Withdrawals (~half a year+ after the Merge), and the APR is expected to grow after the Merge.
3. We’re working on properly detailed budget rn, but let’s consider 50-strong team with $200,000/year gross comp. RCC budget for this year calls for ~$2,500,000/year on marketing & ops costs on top of team comp, making it for $12,500,000 / year, $3,125,000 / quarter budget, nominated in stables.

Model:

1. Have we reached the bottom at ~$1800/ETH, the costs of $3,125,000/quarter is ~1750 ETH and is fully covered by the protocol fees.
2. Have the price drop to $1500/ETH, the quarterly cost is ~2100 ETH, taking almost entire new protocol income.
3. $1000/ETH makes costs at 3,125 ETH/quarter, calling for ~1000 ETH / quarter extra from the Treasury.
4. $800/ETH makes up for 3,900 ETH/quarter costs and requires 1,650 ETH/quarter from the Treasury. That’s 6,600 ETH from the Treasury a year, or 3.8 years of runway with Lido DAO’s 25,000 ETH+stETH Treasury & current rewards rate.
5. $400/ETH makes costs at 7,800 ETH/quarter. Those would require 5550 ETH/quarter from Treasury, and the total runway would be a year and 1.5 months.

The market has seen the 4-year bear already, and the drop wasn’t 2x or 5x — it was ~15x. Selling 10,000 ETH would allow to secure ~1.5 years of runway while having the chance to accumulate rewards in a meantime. Would took less ETH have we done it earlier for sure, but we’re making next moves from the situation we’re currently in.

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