On december 2021 begins unlock of LDO founders tokens. Considering that fact I propose:
Pair some of the founders LDO tokens (quantity of tokens discussable) with ETH from treasury in a 50/50 proportion and add it to LDO/ETH Uniswap v3 full range position. In Uniswap v3 trading fees are not auto-claimed, the position holder needs to claim fees every time. The trading fees from LDO/ETH pool will be distributed in 50/50 proportion to Lido founders (and they are free to spend this income as they wish), since they provided personal LDO tokens and other half of trading fees goes to LDO treasury, since ETH is from there.
What this will accomplish?
1 - LDO founders are showing long term commitment to the protocol, since they are putting their own tokens to work (skin in the game). Also dispels fears about founders dumping tokens.
2 - LDO treasury becomes productive. With full range position and 1% trading fees I expect APR to be in the 10-15% region. And the best thing is that income is from pure trading fees and doesn’t rely on LM. Both in bull and bear markets there will be people trading LDO tokens → constant stream of trading fees to Uni v3 position holder, as long as LDO or ETH doesn’t go to 0.
3 - Deep liquidity. Good for LDO farmNdumpers and good for potential big buyers. Also having deep liquidity on dex is a prestigious thing for a protocol IMO.
Downsides? I can only think of one: if LDO goes to 0, then ETH added to Uni v3 from treasury will be rekt.
This is a good proposal: 1. Increase the confidence of the community in the project
2. Conducive to the long-term development of the project.
3. Fulfill the long-term expectations of the project team (it is impossible to sell tokens in the short term)
This is something we are working on with a pending Tokemak proposal for LDO. It will accomplish many of the above goals.
Putting the ETH in the treasury at risk like this most likely is not a viable option at the moment as there needs to be a backstop for emergencies and slashing risks.
We have seen many articles about Lido, which are very optimistic about its future and believe that it will occupy a huge share of the POS market in the future. But the only thing that worries everyone is the one-year token unlock in December, which has been plaguing the market’s doubts about Lido and whether the release cycle can be extended to 3-5 years if the team is confident enough.Lido Dominates Liquid Staking - Delphi Digital
Another option to incentivise LDO owners in general to hold their tokens would be to turn LDO into a productive asset (e.g., distribute part of the 10% reward fee). Has this been considered (sorry if I missed it)?
Yes it has been considered. For younger protocols there is risk to spending the revenues on dividends. We have competitors that are on single protocols where they can distribute 100% of their supply to one ecosystem. We are multi chain and need to consider the complexity in that.
The unlock is a pending question of how much liquidity will actually vs potentially become unlocked and sold. That being said, I am in discussions with larger firms that are looking to hold $LDO but do not have access to enough liquidity to enter a position. So in their case, they want more $LDO to be on the open market in order to buy exposure without destroying the pools on AMMs.
So while this might drop the price in the short term, it would net be better for Lido in the long term. Getting more $LDO on the market for new buyers to join the community.
I am only a single voice in all of this however and am myself only a small $LDO holder comparatively so this is all open for discussion.
@Yudao this is to be expected. Mercenary capital that is farming $LDO or any other token will always sell to consolidate their position and move to wherever the best yield is. Liquidity incentives are a tool to solve a specific problem around liquidity for people to enter/exit positions. They will never be long term holders unless the expected value of holding/staking outweighs farming opportunities elsewhere.
