Proposal for Lido Staking: $ETH Rewards for $LDO Stakers

TL;DR:

  • Introduce a new rewards distribution model for $LDO stakers, providing rewards in $ETH instead of $LDO to directly tie benefits to the protocol’s main activity.
  • Redirect 40-50% of Lido DAO revenue to $LDO stakers in $ETH, adjustable by governance vote.
  • Maintain a 14-day vesting period for rewards to promote long-term protocol alignment.
  • Staking $LDO offers tangible value from protocol revenue, aligns incentives, and reduces potential sell pressure on the $LDO token.
  • **No buybacks/burns of $LDO, those are of no interest to nobody.

Executive Summary

Start a distribution mechanism for $LDO stakers by introducing a system where rewards are distributed in $ETH rather than $LDO. This change aims to directly align staker rewards with the protocol’s primary activity and revenue source, enhancing value accrual to $LDO token holders and improving the overall Lido ecosystem’s health.

Proposal Details

Objective: To enhance the $LDO token utility, align incentives across the Lido ecosystem, and provide direct, tangible benefits to $LDO stakers through $ETH rewards.

1. Revenue Sharing Mechanism Adjustment

  • Previous Proposal: A portion of Lido DAO revenue is redirected to buy back $LDO tokens, distributing them to $LDO stakers. (Awful idea, don’t think of it again, thanks)
  • Proposed Change: Redirect a configurable percentage (40-50%, governed by Lido DAO voting) of Lido DAO’s revenue from the protocol treasury directly to $LDO stakers in the form of $ETH.

2. Implementation of ETH Distribution

  • Distribute $ETH to $LDO stakers on a weekly basis, proportional to their staked $LDO tokens.
  • Maintain the proposed vesting period of 14 days for the distributed $ETH to ensure long-term alignment and commitment.

3. Insurance Fund Considerations

  • Uphold the establishment of a minimum threshold for the LidoDAO insurance fund.
  • In the event of a fund reserve shortfall, prioritize fund replenishment through the same revenue redirection mechanism, temporarily pausing $ETH distributions if necessary.

4. Staking Terms and Conditions

  • Retain the proposed 14-day unstaking cooldown period for $LDO stakers to support protocol stability.
  • Implement a risk mitigation mechanism that aligns with industry standards, ensuring the sustainability of the rewards system.

5. Benefits of the Proposed Change

  • Direct Value: $LDO stakers receive rewards in $ETH, offering immediate and tangible value from their participation in the protocol.
  • Aligned Incentives: Rewarding stakers in $ETH ensures alignment between the protocol’s success and the stakers’ benefits, fostering a healthier ecosystem.

Next Steps

We propose initiating a discussion period of 7 days for community feedback, followed by a signaling vote on Snapshot.

This period will allow us to refine the proposal further and ensure it meets the community’s needs and expectations.

By adjusting the rewards mechanism to distribute $ETH, we aim to provide a more compelling and beneficial staking proposition for $LDO token holders, ensuring the Lido protocol’s continued growth and success.

5 Likes

Hey!

Appreciate the proposal and governance participation. Love to see it.

On the main topic, it’s a similar proposal to this, which was freshly in the voting.

That proposal was similar to this which was discussed extensively under a year ago.

Personally think your proposal is a bit rushed and overly aggressive, which as a result, would impact multiple layers of the Lido software, DAO treasury, and the sustainability of the whole Lido ecosystem. As end result, it would have the opposite impact on LDO tokens compared to what the majority of holders expect.

Fee sharing at this stage is shooting over the target.

P.S. My first reaction would be to propose treasury LDO to be staked, which would be dominant in fee collection, so 0 sum game, too much effort, and a lot of drawbacks. :slight_smile:

3 Likes

Appreciating the effort on this proposal, I recommend slowing down the move to Snapshot voting. The first step of the Lido DAO Governance process is a consensus on forum.

This proposal to shift from LDO buybacks to direct $ETH distribution hasn’t addressed concerns from @Hasu (Activate Lido Protocol Governance with Revenue Share Staking - #2 by Hasu) and @steakhouse (Activate Lido Protocol Governance with Revenue Share Staking - #3 by steakhouse). Feedback during the Snapshot vote also indicated concerns about the proposal’s long-term safety and soundness. Simply put, this pivot does not fully address the uncertainties brought up in the preceding discussions.

2 Likes

this is a tremendous bureaucracy approaching the lows ldo/btc from the luna crash

the fact that no one cares about the token is astounding

i sold a while ago when i was told to create a proposal for a L2 and no one responded

very sad to see LDO drop to #57 as the founders all leave the project to start their own funds and new projects

very sick people all of u to lose people money like this and not make any changes

1 Like

Hi everyone, I’m a newbie.Unfortunately, I bought LDO last year.The only reason I bought it is because it is an ETH staking project.But it serves no purpose other than voting.Even if the LIDO project is done well, no other benefits can be obtained.It will not affect the price of LDO.Conversely, if LIDO’s TVL continues to fall, I will suffer losses.So what is the function?Hold LDO?I not only want to be the mascot of the project, but also hope that the project party can give LDO more functions.

1 Like

LDO as is now is what it says on a tin: Lido DAO governance token.

As had been discussed on forum multiple times, there are arguments on both sides of changing / not changing that. The best place to address it is in the GOOSE cycle - my take would be, the tokenomics / changing the “utility” of the tokens must be a part of the overall strategy, and not be one-off thing.

1 Like

Thank you very much for your reply.First of all, you are right, it is definitely not something that can be achieved overnight. But even though we are in a bull market now, almost no one in the market is discussing LDO anymore.Even if we finally make changes, we may miss the best opportunity and be replaced by other projects of the same type.As a newcomer, I have such concerns.The current LIDO itself is unfair to all those who hold LDO tokens, because it will fall with the decline of LIDO TVL. If LIDO does not develop well, those who hold LDO will have to bear losses, but LIDO If the development goes well, LDO holders will not benefit.

2 Likes

Disappointment of LDO community is clear and seen in # of revenue proposals.
It’s important to grow the pie before slicing it and including utility in long term strategy.

We need to have clear guidelines when this option can be brought back
as example:
Lido Marketshare > X %
StEth Volume > X %
Protocol Revenue > X$
etc.
Right now all the new “priorities” sound like empty promises that community hears for several years.

There’s no need to rush, but plans of utility should be clear and on the table.

3 Likes

I recommend everyone look at
https://dune.com/queries/2722779/4533150
to get a better picture of Lido’s financials

3 Likes

Lido tokens can be inflated, with an inflation rate of 8% a year? Like DOT.

Tokens can be pledged and pledged to give ldo inflation rewards

no, There is no inflation mechanism of Lido Governance token.

You can write a new white paper 2.0