Referral Program rules adjustment

Proposals
1

Since Lido integrated with Aave (which made possible to use stETH as a collateral and borrow ETH) we need to adjuct terms & conditions of Referral Program to properly manage lending/borrowing protocols interactions.

Motivation
Leverage lending is profitable, user could stake borrowed ETH and use received stETH for lending again multiple times to increase the APR. Anyway eventually loans have to be repaid.
To payback a loan users will convert all the secondary borrowed stETH back to ETH. Paying referral rewards for that would lead to ineffective spending referral rewards pool and Lido DAO treasury in general.

Proposal
Extend Referral Program terms & conditions with a rule:
"Staking of ETH borrowed on lending/borrowing protocols (like Aave and others) is not going to be rewarded. It also relates to ETH that was bought with any other borrowed cryptocurrency (like DAI).”
Referrals will get reward for the initially staked ETH but not for the secondary staked borrowed ETH.
The updated rules will take effect into the current referral period (18th).

6 Likes
2

Hello! I will be recommending the Rabbithole metagovernance pod vote no on this proposal. I thought I would stop by and share my reasonings for this:

  1. This proposal gives no solution to monitoring how ETH is staked, or how this policy will be ‘policed’. It is a bit unproductive to propose ‘additions to terms’ without a working solution proposed.
  2. There is a lot missing in this proposal, and there should be a standard set for proposals. The proposal does not give clear information on how this method could be used to ‘game the system’.
  3. If proper research had been completed, it would be clear that utilizing Aave to ‘game the system’ would be very inefficient. There is a 70% LTV parameter that makes it very unattractive to use in the case of gaming the referral rewards program. If I am mistaken here, please correct me, but the fact remains: this information should have been included in the proposal.
  4. This post was created at the same time as the vote. Do you think it would be better to have a posting period in the forum before the Snapshot poll is live? Doesn’t seem like there was adequate time given for much of any response.

Question I would like answered:
What method will be used to enforce this policy update?

4 Likes