Proposal: Enable $LDO Staking with Protocol Revenue Sharing

Proposals
1

:loudspeaker: [Proposal] Enable $LDO Staking with Protocol Revenue Sharing

:speaking_head: Intro

Hi everyone,
Recently, we’ve seen more and more DeFi protocols (like Aave and Curve) exploring ways to distribute protocol revenue to their token holders.

As a long-time supporter of $LDO, I’d like to raise a simple question:
Should Lido consider introducing a similar model where staked $LDO holders receive a share of protocol revenue?

Below is a rough outline of the idea. I’d love to hear your thoughts, feedback, or suggestions.

:memo: Proposal: Enable $LDO Staking with Revenue Sharing

:pushpin: Summary

This proposal suggests enabling $LDO staking with protocol revenue sharing to strengthen token utility, align incentives, and reward long-term holders.

:light_bulb: Key Points

  • Allow $LDO holders to stake tokens and receive a portion of Lido protocol revenue (e.g. 20–30%)
  • Rewards could be distributed in ETH, stETH, or via $LDO buybacks
  • Add a 6-month vesting period for rewards to reduce short-term speculation
  • Stakers retain governance rights (potentially via veLDO or time-locked models)

:bullseye: Why It Matters

  • Creates real yield for $LDO holders
  • Enhances token utility and governance participation
  • Aligns Lido with leading DeFi protocols like Aave and Curve

:bar_chart: Simple Projection (Assuming 25% Revenue Sharing)

  • Estimated annual protocol revenue (based on 2024 Q1): ~$112M
  • 25% allocated to LDO stakers = $28M/year
  • If 30% of circulating LDO is staked (~300M tokens):
    → Approx. $0.093 per LDO/year = ~9.3% APY at $1.00/LDO price
  • Higher APY possible with more protocol growth or lower staking participation

:chart_increasing: Reference Protocols

Protocol Revenue Sharing Governance Boost Notes
Aave :white_check_mark: Yes (via veAAVE) :white_check_mark: Yes Treasury income shared with stakers
Curve :white_check_mark: Yes (via veCRV) :white_check_mark: Yes veCRV gets 50% of protocol fees
Lido :cross_mark: Not yet :white_check_mark: Yes Proposal in discussion

:ballot_box_with_ballot: Next Steps

  1. Gather community feedback and suggestions
  2. Launch a Snapshot signaling vote
  3. If approved, proceed with formal DAO implementation process

:speech_balloon: Feedback Welcome

Would love to hear what the community thinks — especially around:

  • Revenue share %
  • Reward token format (ETH, stETH, LDO buyback?)
  • Staking model (simple stake or veLDO-style lockups)

Tags: ldo, staking, revenue-sharing, tokenomics

2 Likes
2

Personally strongly disagree with sharing revenue. Previous identical proposals have failed to gain traction for multiple reasons.

It’s more in the $30m range. 25% of 30m is 7.5m. If 300m LDO staked per this proposal that would represent less than 2.5% APR, contingent on ETH price. The DAO fees are a very thin margin to peel off from and would divest surplus away from investments in growth. A more interesting structure would be a surplus sharing mechanism that distributed excess capital, however defined, in our view.

4 Likes
3

Thank you for the feedback — I appreciate you taking the time to respond.

You’re right that previous proposals around revenue sharing didn’t move forward. I believe it’s worth revisiting the topic now for a few reasons:

  • The protocol has matured significantly since earlier discussions
  • Many top DeFi protocols (Aave, Curve, etc.) have successfully implemented similar models
  • The lack of direct utility for $LDO continues to be raised by both long-term holders and newcomers

That said, I totally understand the concerns around revenue sharing. If you’re open to it, I’d be curious to hear which specific risks or drawbacks you feel remain unresolved.

Thanks again — I think healthy disagreement is a great starting point for meaningful governance discussions.

1 Like
4

LDO/ETH is down -85% printing new lows every week, while other DEFI tokens are striving (AAVE) or going sideways (UNI).

I think this is the reason of so many revenue sharing talks (which prob wont help at this stage) and would be great to recieve some airdrops from Lido Alliance projects like Symbiotic etc.

1 Like
5

Totally get where you’re coming from — $LDO’s recent price action has definitely been frustrating, especially when compared to AAVE or UNI.

That said, I don’t see revenue sharing as a “quick fix” for price — rather, it’s a long-term mechanism to give $LDO more concrete utility and value alignment.

Short-term, I agree that initiatives like airdrops from Lido Alliance projects (e.g. Symbiotic) would be great to energize the community — but they serve a different purpose than protocol-level tokenomics.

Maybe it’s not about one or the other, but how both approaches can support different types of holders:

  • Airdrops help attract interest
  • Revenue sharing helps retain and reward alignment

Appreciate your input — would love to hear what kind of distribution model you’d find most impactful!

2 Likes
6

It’s worth remembering that LDO tokens played a major role in the early funding of the Lido protocol.

In its earliest stages, Lido raised capital by selling LDO to strategic investors. These funds helped build the core infrastructure, fund audits, launch stETH, and grow Lido into the leading Ethereum staking platform we see today.

Now that the protocol generates strong and consistent revenue (over $100M/year), it seems fair and timely to consider how the token holders — who helped bootstrap the protocol — can share in its long-term success.

Revenue sharing isn’t just about boosting token price. It’s about reinforcing the alignment between token holders and protocol growth, ensuring long-term engagement, and giving real utility to the governance token.

If LDO played a central role in funding the protocol, it also makes sense for it to have a sustainable role in benefiting from the protocol’s success.

This proposal isn’t about draining the treasury or reducing development budgets. It’s about introducing a balanced, forward-looking model that rewards commitment and strengthens governance.

Open to ideas on how best to design this — but I believe the time to revisit this conversation is now.

2 Likes
7

Enabling protocol revenue sharing is a great idea. I think there are a few points to consider to ensure we are all on the same page.

1. Estimating Revenue
Both DefiLlama and TokenTerminal show $86 million of revenue for the past 12 months, with calendar year 2024 bringing in over $102 million of revenue. We can start to estimate potential annual distributions as follows:

Revenue 5% share 10% share 20% share 30% share
$85 MM $4.25 MM $8.5 MM $17 MM $25.5 MM
$100 MM $5 MM $10 MM $20 MM $30 MM

2. Estimating Number of Stakers
Looking at protocols with revenue sharing such as AAVE (~20% staked) and PENDLE (~30% staked), we can estimate the percentage of LDO holders who might stake their tokens. Split the difference and take 25% of the circulating supply (just under 900 million LDO), yielding:

  • 225 million LDO staked
  • $184 million in staked LDO at the current price of $0.82

3. Estimating Yields
We can combine points 1 and 2 to estimate staking yields:

Revenue 5% share 10% share 20% share 30% share
$85 MM 2.3% 4.6% 9.2% 13.9%
$100 MM 2.7% 5.4% 10.9% 16.3%

These numbers make it clear that even at lower revenue-sharing percentages, staking yields can be significant, especially at today’s LDO price, and this would likely provide an immediate, positive impact on LDO’s market value.

4. LDO in DAO Treasury
We should take a moment to note that the DAO treasury contains 103 million LDO.
If this is staked, the DAO would receive a proportional share of the revenue. If it’s not staked, we need to revise our staker estimates down by 11%, or a total of $163 million LDO staked.
Additionally, enabling revenue sharing helps address some of the recursive accounting issues that arise when a DAO holds its own token. Providing cashflows can enable the DAO’s holdings to be valued more accurately and reduce both perceived and actual financial risk.

5. Implementation Specifics.
I’d encourage starting with a low revenue-sharing percentage — somewhere in the range of 5–10% — and then observe how the market and the DAO react.
Once we work through any potential issues and gauge its impact, we can gradually increase the percentage.

This approach maintains flexibility, allowing us to reinvest revenue back into the ecosystem and retaining the option for additional mechanisms (such as token buybacks) if desirable in the future.

In Conclusion
Allowing for revenue sharing is a no-brainer. It signals Lido’s maturation and helps align incentives for stakeholders over the long term.

While we should proceed with care and patience, we must implement this in a way that sets up the ecosystem for sustained growth.

8

Thank you for this thoughtful and well-structured response — it’s exactly the kind of analysis this topic needs.

Your breakdown of potential revenue share percentages and projected staking yields makes a compelling case for the positive impact such a model could have, even at conservative levels like 5–10%.

I also appreciate the point about DAO treasury-held LDO. Whether or not it’s staked should be part of a transparent framework that avoids circular accounting while still maximizing ecosystem benefit.

Starting small and iterating — based on real feedback from the market and DAO — seems like the most responsible path forward. I’m fully aligned with the idea of launching with a limited share (e.g. 5%) and building on that once mechanisms and outcomes are clear.

Would you be open to helping co-author or support a formal proposal draft or Snapshot structure? Your insights would be incredibly valuable in designing a sound and balanced implementation plan.

Thanks again for engaging deeply — this kind of exchange is exactly what makes good governance possible.

9

It is quite important to understand how much money is currently being spent on development, since most projects do not distribute income not because they are stingy with money for their token holders, but precisely because a significant part of the income is spent on development and while it is ongoing, revenue may be large, but there may be no profit at all.
It is necessary to analyze this

2 Likes
10

You’re absolutely right — before implementing revenue sharing, it’s essential to understand Lido’s spending and whether meaningful profit exists.

According to Token Terminal, Lido generated ~$102M in protocol revenue over the past 12 months. A significant portion goes toward ongoing development, audits, ecosystem grants, and validator incentives.

The good news is that Lido publishes detailed quarterly financial reports on the forum :link: Lido Financial Reports, including:

  • Total expenses (dev, ops, grants)
  • Treasury balances
  • Net inflows/outflows

For example, in Q3 2023, total expenses were around $11.5M while revenue exceeded $25M — suggesting a healthy margin.

That said, you’re right — any revenue-sharing mechanism must be designed responsibly, ensuring core development remains well-funded while aligning incentives for token holders.

Let’s dig deeper into the latest financial report and revisit the numbers together.

11

Thanks for raising the point about development spending — it’s absolutely essential. Fortunately, we can now reference real estimates to assess feasibility.

:bar_chart: Based on public reports and on-chain dashboards:

  • Estimated protocol revenue: ~$102M/year
  • Q1 2025 spending (dev, audits, ops, etc): ~$56.6M
    → Annualized: ~$226M
  • Estimated net income (conservative)**: ~$51.6M/year

:receipt: Here’s a simplified chart showing the financial snapshot:

Lido Protocol – 2025 Estimates

  • Protocol Revenue: $102M
  • Development & Operations (Annualized): $226.4M
  • Estimated Net Income: $51.6M

![Lido Revenue vs Spending vs Net Income - Chart](Please upload the image manually here and replace this line with image description if needed)

:magnifying_glass_tilted_left: Insight: Even with strong development investment, there remains meaningful net income that could be used for:

  • Staking rewards
  • Buybacks
  • Treasury growth

And all this without jeopardizing core operations.

Enabling a small (e.g. 5–10) revenue share would not break the budget — it would simply help retain token holders and better align incentives.

Let’s continue analyzing and designing something sustainable.

12

I have a different approach to treasury management

Introducing a Dynamic Buyback Program for LDO

Lido DAO has accumulated a $109M+ surplus in the treasury

  • $10.2M USDC
  • $11.9M USDT
  • $12.2M DAI
  • 29,745 stETH (~$75M)

This creates an opportunity to enhance value for token holders while keeping the treasury healthy and functional.

TL;DR

I propose initiating a dynamic buyback program for LDO tokens.

The goal is to restore confidence in the token’s value, better utilize treasury funds, and reward the Lido community for long-term engagement.

Key Points:

I propose a dynamic allocation strategy for treasury utilization:

  • 70% of incoming tokens to be used for periodic LDO buybacks
  • 30% retained in the treasury for operational and strategic use
  • If the treasury falls below a defined threshold $50M, the allocation dynamically reverts to 0% buybacks / 100% reserve retention until the threshold is restored

Buybacks are a proven tool in decentralized finance to return value to tokenholders, support token price, and enable long-term sustainability. Several notable examples illustrate how this strategy has been effectively applied (this is just a set of recent examples):

  • Jupiter Exchange has committed to using 50% of revenue for buying back JUP, reinforcing value alignment with its community.

  • AAVE authorizes the Aave Finance Committee (AFC) to initiate AAVE buybacks as part of the Aavenomics implementation

  • dYdX is launching the $DYDX Buyback Program, reinforcing long-term confidence in the token and strengthening its role in the ecosystem

  • Derive swaps DeFi tokens held in the Derive DAO treasury for USDC and allocate the proceeds to increase weekly $DRV token buybacks

  • Origin Protocol allocated 100% of revenue and treasury funds to support OGN price by buybacks

Objectives

  • Establish a cyclical token economy: buybacks return LDO to the treasury, enabling future strategic use (e.g., contributor rewards, grants and so on). This cyclicality transforms buybacks from a one-off expense into a strategic allocation that supports long-term development and adaptability
  • Strengthen LDO’s market value, improving confidence for both current holders and future tokenholders. A rising token price reflects positively on the project’s perceived health and success, attracting more participants to the ecosystem. It also counteracts prolonged downward pressure, helping to restore confidence in the token as a valuable asset
  • Reward contributors and DAO participants by reducing supply and creating positive price pressure. Long-term contributors, voters, and DAO participants are often exposed to significant volatility. A buyback program serves as a signal that their commitment is recognized and valued. By creating upward price pressure and reducing the token supply, it rewards their patience and involvement. This strengthens the social contract between the DAO and its community, promoting loyalty and longer holding periods
  • Encourage long-term governance participation by aligning incentives. A well-executed buyback strategy helps restore confidence in the token’s long-term value and ensures that governance participation is not financially punitive. It aligns incentives by showing that the DAO is committed to supporting the token’s health and the people who help shape its future

This leads to a sustainable treasury model, where capital is not simply spent, but cycled to reinforce DAO health and ecosystem growth

1 Like
13

Buyback Allocation Mechanism – Burn Model

All LDO tokens repurchased through this program will be sent to a burn address, permanently removing them from circulation.

This creates direct value for LDO holders by reducing the total token supply and strengthening scarcity over time.

Burn address: 0x000000000000000000000000000000000000dEaD

No LDO acquired via buybacks will be held by the DAO, reused, or distributed.

This ensures full transparency and commits the DAO to a deflationary, community-aligned policy.

14

Burning tokens seems like a poor choice in a system with a fixed token supply and no future issuance. In an inflationary model, this would be a solid approach — but here, it simply removes tokens that could otherwise be used for the protocol’s benefit.

Therefore, I think a buyback mechanism without burning would be a better option

15

The team has no sympathy for the token holders. They don’t care about the community’s ideas at all. They have always looked down on the token holders with arrogance. They have always wanted to monopolize all the benefits of the protocol. Damn…

16

You are just like disgusting maggots, constantly sucking all the nutrients of the protocol. You have no gratitude for the token holders in your heart, and have never thought about making any meaningful value for the protocol. Damn demons.

17

Great point — and I appreciate your long-term thinking.

I fully agree that in a fixed-supply system like LDO, buybacks don’t have to result in permanent burns to be effective.

One possible compromise could be:

Buyback → Lock into a non-transferable DAO-controlled vault
→ Re-evaluated by governance every 6–12 months
→ Option to burn, redistribute, or deploy strategically

This gives us:

  • The short-term signaling effect of active buybacks
  • The long-term flexibility to use these tokens if ever needed
  • Full governance control over how repurchased LDO is handled

This way, we aren’t locked into burning, but we also don’t dilute the benefit of buybacks by simply letting them accumulate idly.

Would love your thoughts on this hybrid approach!

18

I hear your frustration — and you’re not alone. Many token holders have shared similar concerns over the past year, especially with price performance and governance engagement.

That’s exactly why I’ve proposed this buyback mechanism: to open up a path where protocol success starts to benefit token holders more directly.

That said, I believe the best way forward is not to give up or just criticize, but to push for changes through proposals like this one, and by uniting voices in the community.

Let’s turn this energy into pressure for greater transparency, better tokenholder alignment, and more responsive governance. I’m here to help build that bridge — and would welcome your ideas on how we shape it.

Thanks for speaking up.

19

I’m advocating for either a buyback and burn mechanism or a revenue-sharing model for Lido’s LDO token. Both approaches offer strong benefits. However, I believe a buyback without a burn is a poor compromise that misaligns the interests of LDO tokenholders and the DAO.

I am strongly against a buyback without a burn.

If the DAO buys back LDO and holds it in the treasury for “strategic use,” its only real options are to:

  • Sell the LDO in the future, which would put downward pressure on the token price, or
  • Use it for token incentives, which would likely be sold by mercenary capital, again pushing the price down.

In either case, these actions go directly against the interests of LDO holders. They also create long-term uncertainty, since any large LDO balance held in the treasury could be sold at any time. To my knowledge, no major DeFi protocol is buying back tokens without also burning them, likely to avoid these misaligned incentives.

When thinking through what makes the most sense for Lido, I find it helpful to look at how other successful DeFi protocols have approached this:

  • Aave (AAVE): Staking is directly tied to the Safety Module (insurance fund), which earns yield while supporting protocol security.
  • Pendle (PENDLE): Uses long-term token locking, where the lock duration boosts both voting power and revenue share. This creates strong alignment with long-term holders.
  • MakerDAO/Sky (MKR/SKY) Uses an algorithmic buyback and burn funded by surplus revenue. This steadily reduces token supply, benefiting holders over time.

Each of these models does a good job of aligning tokenholder rewards with the long-term health of the protocol. I think Lido can adopt a similar approach, either through a buyback and burn or a staking-based revenue-sharing model, to better align LDO holders with the protocol’s future.

20

Yes. I apologize for the delayed reply, I’ve been traveling.

Once we have a cohesive plan to present to the DAO as a formal proposal, I would be happy to co-author it and support it in any way I can.