Below is my opinion as strategic advisor to Lido, and it does not represent those of the Lido team or other investors. I disagree with the proposal because of economics, priorities, and differentiation.
First, we’re projecting Lido DAO to make $30m in gross margin (at current eth price), spend $30m in cash, and spend $15m in token incentives, for around $45m in total expenses over the next twelve months. This comes down to a net P/L of -$15m.
Our treasury is $67.5m, so that’s around two years of runway. You suggest spending up to $15m from our treasury, not on growth or improving the product, but to pump the LDO token. This would bring our annual P/L to -$30m and our cash burn to $45m, cutting our runway to ~1 year.
If we look at the current roadmap, two things stand out above all:
- shipping the staking router and bootstrapping a vibrant ecosystem around it
- shipping dual governance to derisk the protocol and align the interests of stETH holders and LDO holders
Both are necessary to further decentralize Lido Protocol, the former by expanding the NO set to include smaller operators and the latter by constraining failure modes that come from governance.
Removing the remaining trust assumptions in Lido is incredibly important to realize our mission of making a fully trustless staking middleware for Ethereum, allowing us to scale to a bigger market share safely. We must focus our scarce engineering resources on this single goal and not get distracted by other things before it is done.
Finally, you ask to bond existing Lido node operators (NO) with LDO token. Lido’s key differentiator has been having the lowest cost of attracting a quality NO set. Adding a bond would undermine Lido’s differentiation and raise the cost of attracting and retaining quality NOs, undermining our competitive position.
Bonding validators can make sense but only in the right context. Someone should create a staking module that allows untrusted NOs to join the operator set with a mix of DVT and posting bonds. These bonds can use ETH or LDO, that is for the market to determine.
In summary, the proposal is so poor and poorly timed that my first instinct would be that it can only come from a) a competitor to Lido or b) someone with an extremely short time horizon who is looking to pump the LDO token for a quick buck. The recent price action (pump → dump) validates that assumption.
The strength of Lido as a DAO and community has always been that we have a longer time horizon than anyone else and that we don’t sacrifice the long term to earn cookie points in the short term. We shouldn’t give up on that now.