Should Lido support Terra reboot?

Given the calculations of the possible profit from the staking and the potential repetitional risks it looks like we should only support relaunch if we have strong confidence in the Terra relaunch success. In this case option C looks reasonable. Otherwise it will be better to choose option A and reassign team resources to the other projects on the Cosmos ecosystem.

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I suggest that Lido should support the Terra reboot at genesis. Liquid staking tokens were a key part of the Terra classic ecosystem, with large demand and usage throughout the ecosystem

If Lido Finance were to receive an allocation of tokens for committing to build on the rebooted chain, then a portion of those tokens could be used to provide additional incentives for staking with Lido Finance or to incentivise adoption of the new liquid staking tokens in the new ecosystem.

It may be worth waiting until a few weeks after the reboot (after the dust has settled) to see where the token allocation could be used most effectively

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Supporting C as well. The Terra ecosystem with all its projects and developers is still very strong and innovative.

C) Support the reboot, keep X tokens as compensation for redeploying the contracts and donate the rest to impacted UST savers.

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I do not believe Lido should re-launch on the new Terra chain. Taking the incentives and distributing them to previous UST holders is noble and worthy, but not without significant challenges.

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I have always seen Lido‘s presence on Terra as mistake and more of a „technical debt“ than an opportunity. If Terra becomes a regular smart contract chain without built-in ponzi we can and should evaluate it alongside all other opportunities, but today it does not deserve a special treatment. I have fairly strong feelings against a reboot at this time, for that reason.

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I think aggregating all the information and putting this to a DAO vote was the right thing to do – ultimately Lido acts collectively and it behooves us to provide the Lido community with information and options so that they can make informed decisions.

My personal take is that we can always join the reboot at a later time if the chain proves to be useful and well-run and has grassroots support. At this time there are too many questions around the reboot and committing poses potentially high downsides with little upside.

I’m in the A camp.

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Fully agree with this assessment. As it currently stands, I would lean towards option A and revisiting at a later point when there are better indications as to whether the Terra reboot has enough traction and might be able to grow and succeed in a sustainable way. We (Chorus One) will need to discuss this internally and will then vote on the Lido DAO proposal accordingly.

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I wouldn’t support returning on Terra later if it finds its legs tbh. There’s an option of going away, and an option of helping the victims of the blow up by redistributing Lido’s potential portion of the distribution that look okay to me.

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Strongly against supporting the new Terra chain, there’s better use of resources than supporting a ponzi VC chain.

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  1. It is relatively quick and easy to support the reboot

  2. Waiting a few months is not really an option as other liquid staking protocols will likely have taken the bulk of the market share

  3. Lido Finance should be as impartial as possible and support all ecosystems where there is demand

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Options A and C seem reasonable, leaning slightly more towards A, though, for the reasons Izzy and Felix have already outlined.

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Lido ought to try to be protocol agnostic, while also prioritizing the highest value projects to efficiently utilize our limited resources.

Time:
While I cannot claim to understand the technical workload here, If there are other higher priority projects that are going to be delayed because of this, then A makes perfect sense.

Economic cost:
I am curious what is the actual cost to deploy a smart contract and support liquidity? I presume the labor expense is quite minimal in comparison to supporting liquidity? That seems to be the primary expense across other protocols. In fact, it seems to be a rather significant expense even in well established protocols. This could be a financial sink hole if there is no adoption.

There is no proven demand but an asymmetric amount of reputational risk.

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In agreement with Hasu here, I think it’s worth considering that supporting the new Terra chain carries substantial risk and should be evaluated far down the road once the protocol’s economics have been settled and there is certainty that it is actually worth supporting.

Agnosticism means taking account of the risks presenting themselves in this case. With this in mind, it is not an opinion that nothing is certain with the future of Terra and there is no reason to take action on supporting it. It should be evaluated as a new opportunity, far down the road, not right now based on the presumption that it will be well executed.

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“Lido can return if Terra reboot thrives” is not a realistic option. Community alignment is a very important thing in liquid staking. Abandoning what’s left of Terra in the darkest hour will not be forgotten, and there will be no successful comeback in the future.

It’s not an argument for deploying, mind you. I think the obly two ethical options here are either not deploying or using Lido’s position on reboot to reimburse UST holders in some way. Just saying “we’ll return later” is not going to work.

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We just watched a Layer 1 blockchain fail because demand for its blockspace was not enough to support its primary use case (Stablecoins).

That revenue, when risk adjusted, is effectively negative.

I honestly would expect even if this passes, Lido’s general counsel will strongly interfere for brand reputation purpose.

The SEC will be watching everyone involved, including Lido, which already has a target on its back for its dominant market position in ETH PoS.

Terra does not have a fee market for pricing blockspace. It’s brand is dead in it’s primary market (Korea), the foundation owes $78M+ in taxes, the founder is under investigation, we still don’t have a clean easily read audit on how $2,000,000,000 of Bitcoin was used to protect the peg (as opposed to being used as exit liquidity for insiders).

Frankly, I’m surprised this proposal with a due date within 30 days of a $60B+ Ponzi collapse is even a conversation.

I mean, what’s the fear? That Lido will miss out on a few million dollars for a few months because they were cautious about jumping onto a hard fork 2 weeks after collapse?

That Lido will have to start from 0% market share?

Again, we just saw the market we’re worried about sharing:

1/ isn’t big
2/ doesn’t have sufficient demand for its primary use case
3/ has every regulatory body in the world watching it heavily.

I see virtually 0 positives of aping onto a hard fork proposal written in 2 weeks.

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If consider this question only from a financial point of view, then I would vote for A ("Do not support the reboot), since I estimate the probability of a rapid growth of the new Terra as small due to the “pain” of many participants in the ecosystem (many want to get at least something and forget about this story for some time).

If this is seen as a deep partnership with the terra ecosystem, then I would vote for C (“Support the reboot, compensation for redeploying, rest to impacted UST savers”)
a) to be with the ecosystem not only in good times, but also in bad ones
b) to help somehow the affected participants and those who want to try to develop the ecosystem further
c) it most likely will not be unprofitable.

I agree with Hasu and would vote A.

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As Lido on Terra lead, I want to express my personal position on this.

I feel really uncomfortable with the new Terra proposal.

I won’t argue about Terra/UST stuff, only about the reboot thing.

“Terra is more than UST” is a good slogan but is it right actually? Terra ecosystem evolution was based on the Anchor and UST which made a huge incentivization for the ecosystem growth. And now the new chain is being launched without any actual product-market fit. Teams are going to commit their participation in the project that they hope to be as successful as it used to be but I’m sure it won’t. TFL convince developer teams to rebuild Terra but I’m not sure it’s even the best option for those developers.

So basically from my point of view the only reason to try to relaunch Terra is to help damaged pre-depeg UST holders. Regular holders. Those who were convinced by Terra that their token will be stable. But that’s not what we see in proposal 1623.

Like, what’s the main community request we can see on twitter? Not “please return 20% yield”, not “please make Luna $80 again”. It’s “please restore the peg”. And Terra Revival Plan doesn’t answer this request. That’s why option C exists.

So basically I’m against relaunch. I really hate to say it after all the efforts we put into Lido on Terra. But I hope you’ll understand.

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I will throw my vote behind option A: Do not support the reboot.

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