hey @kadmil, great napkin math, this is really important and helpful for us to think through. I do agree that securing a 18 - 24month runway is critical, though it doesn’t have to be all in one day. In reviewing the Lido Treasury, I could be wrong but it doesn’t look like anyone has been getting paid yet on payroll from the treasury, so my assumption is the off-chain funding is still funding that - but the concern here is that it is running low and soon we will have to switch over to the Lido Treasury for funding all operational expenses.
There’s a few considerations when thinking about your runway (which you have already begun to articulate), one of which is ‘can the cashflow from the protocol cover our expenses and be cash flow neutral or positive’. Since the revenues are in ETH and liabilities in stable coins - even though the protocol / DAO may be cash flow positive when ETH is above $1,800 - you have pointed out the risks and exposures from this asset - liability mismatch.
First - the DAO / team should establish some basic policies for working capital. As an example, at WeWork (where I was the global treasury manager for 6 years previous to web3) we would hold at least 90 days of expected expenses (not including revenues) and Capex on hand at all times (denominated in the various currencies our liabilities were denominated in). We would then hold at least another 180days projected cash burn in ‘safe investments’, denominated in USD (so some currency risk), to earn yield on those, and then every month or when necessary pull funds from the yielding strategies to working capital. Something like this is a good starting point for Lido - ie selling at least 9months worth of ETH (5 - 6k ETH) into stables TODAY, and deploying half or 65% of it into what the DAO is comfortable as conservative stablecoin yields (which should be proposed into a whitelist of allowable investments and part of the official policies).
Additionally there may be an opportunity to utilize cash flows to negate the need to immediately sell the entire 2 years runway, but it will not be an overnight setup and may involve an expert(s).
In a typical treasury world - we would use forward contracts with set expiration dates, typically a laddered & rolling 90 day strategy would work (can detail that for those interested) selling ETH forward every 90 days for USDC. One option would be to contact someone like GSR about this at a big desk. Perpetuals don’t really work the same without a set expiration date that matches an expected cash flow - because we would want to physically settle these forward contracts reducing our exposure, not adding additional leveraged exposure. This is an awesome opportunity because as you mention, the ETH is locked up! So unlike most companies / protocols we can establish projected earnings very confidently, which is a huge advantage (most corps will only hedge like 50 - 60% of expected revenues because of how unpredictable the fp&a projections often are, but Lido is very unique, could likely hedge out even up to 90%) That may take time to setup though - but again could be investigated by the team (or likely Karpatkey has an intro there, and having worked with them a bit would feel confident in their ability to help manage a forwards program).
I’d be happy to help / advise (no compensation) the team out with some of these policies, and on possibilities of setting up a forwards hedging program.