# Should LidoDAO sell protocol surplus stETH to finance operating expenses? **URL:** \ **Category:** Proposals\ **Created:** [February 14, 2023, 6:48pm UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880 "2023-02-14T18:48:17Z")\ **Posts on this page:** 11\ **Page:** 1
**Author:** ![steakhouse](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/steakhouse/32/1878_2.png) [@steakhouse](https://research.lido.fi/u/steakhouse)\ **Post date:** [February 14, 2023, 6:48pm UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/1 "2023-02-14T18:48:17Z")
**LidoDAO Treasury Choices** We’ve launched three other treasury-related proposals aiming to obtain a clear signal from LDO token holders regarding basic principles for how the DAO should manage its treasury. 1. [Should LidoDAO stake treasury ETH?](https://research.lido.fi/t/should-lidodao-stake-treasury-eth/3869/6) 2. [Should LidoDAO sell treasury ETH?](https://research.lido.fi/t/should-lidodao-sell-treasury-eth/3868/6) 3. [Should LidoDAO diversify its stablecoin holdings?](https://research.lido.fi/t/should-lidodao-diversify-its-stablecoin-holdings/3876/2) 4. [Should LidoDAO sell protocol surplus stETH to finance operating expenses?](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880) ## Context > [@Should LidoDAO sell treasury ETH?](https://research.lido.fi/t/should-lidodao-sell-treasury-eth/3868/1): > > - Based on the December and January [run-rates for expenses](https://research.lido.fi/t/rcc-3-lido-1-introduction-to-the-resilience-roadmap/3446/4), we are on-track to a total run-rate of **1.3m to 1.5m USD a month** with a new budget for the period May through December due in the coming weeks. - Since October, the protocol has been generating north of ~1000 stETH each month - At current prices this is sufficient to cover monthly operating expenses in most scenarios - As we prepare for withdrawals, we can expect to see much less price pressure on the stETH/ETH exchange rate than previously expected with large market sales - These sales could be executed through Cowswap over a longer period of time - We had similarly contemplated a CDP strategy to lever up the effective capital structure of the protocol and, while an interesting thought experiment, likely remains in the realm of possibility not reality given the operational constraints of managing complex CDP positions through Aragon votes Proposed execution would likely be on a staggered basis through Cowswap into whatever basket of stablecoins the DAO picks [in this vote](https://research.lido.fi/t/should-lidodao-diversify-its-stablecoin-holdings/3876/2). Look forward to hearing views, alternative options and other thoughts and comments. Final options on Snapshot execution may vary slightly. https://dune.com/embeds/1992044/3296635 ## Options 1. Sell each month whatever amount is required to cover operating expenses 2. Let the whole amount go to protocol surplus ---
**Author:** ![rotorless](https://avatars.discourse-cdn.com/v4/letter/r/a5b964/32.png) [@rotorless](https://research.lido.fi/u/rotorless)\ **Post date:** [February 15, 2023, 2:58am UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/2 "2023-02-15T02:58:06Z")
Have we considered using the capital to generate monthly revenue from DeFi ? > **[Arbor Finance - Borrow on your terms with no liquidations](https://arbor.finance/)** > > Arbor enables DAOs to borrow against their native token with no liqudiations and fixed interest rates. > **[Bond Protocol](https://www.bondprotocol.finance/)** > > Acquire assets, own liquidity and diversify your treasury on the permissionless bond marketplace > **[Buttonwood — Building the DeFi Stack](https://www.button.finance/)** > > Buttonwood is a collection of financial primitives inspired by financial history and built for DeFi. Our core contracts can be used to build DeFi bonds, stablecoins, and structured products without margin calls or liquidations. [https://www.hourglass.wtf/](https://www.hourglass.wtf/) ---
**Author:** ![ErwinSmith](https://avatars.discourse-cdn.com/v4/letter/e/e274bd/32.png) [@ErwinSmith](https://research.lido.fi/u/ErwinSmith)\ **Post date:** [February 15, 2023, 10:46am UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/3 "2023-02-15T10:46:59Z")
It depends on what end up happening with the “sell treasury ETH” vote, we don’t need to sell ETH and also sell stETH. ---
**Author:** ![steakhouse](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/steakhouse/32/1878_2.png) [@steakhouse](https://research.lido.fi/u/steakhouse)\ **Post date:** [February 15, 2023, 10:59am UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/4 "2023-02-15T10:59:09Z")
It’s a fair point. The idea is to seek a signal from token holders regarding the overall policy for sourcing capital for operating expenses. One approach could be to let all the stETH flow to the surplus as long as there is a ‘runway’ and revisit this vote in a year or two. We can stagger this Snapshot vote after the ETH ones. ---
**Author:** ![nicole\_maffeo](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/nicole_maffeo/32/2416_2.png) [@nicole\_maffeo](https://research.lido.fi/u/nicole_maffeo)\ **Post date:** [February 15, 2023, 5:22pm UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/6 "2023-02-15T17:22:54Z")
Agree with @ErwinSmith! Would hold off on until the vote passes on the proposal to sell treasury ETH. IMO, it probably doesn’t make sense to sell stETH as well as treasury ETH: - If 10k ETH treasury tranche sells, 10k ETH remaining to DCA out of without touching stETH. - If 20k ETH treasury tranche sells, it covers run rate for a few years and it’s worth holding the stETH until markets settle. Lastly, by moving stETH to protocol surplus, Lido starts to refill its coffers and hedge the treasury ETH sale (assuming goes through etc). That said, if you guys decide to move forward with a monthly sale, SIZE can easily support. Set up recurring monthly & let it run without any operational overhead x reminders etc. ---
**Author:** ![steakhouse](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/steakhouse/32/1878_2.png) [@steakhouse](https://research.lido.fi/u/steakhouse)\ **Post date:** [February 15, 2023, 5:36pm UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/7 "2023-02-15T17:36:52Z")
Yes, this makes a lot of sense. We might formulate the vote such that it allows the possibility to revisit in 12 or 18mos. Definitely sequence the vote until after token holders decide on the ETH. Appreciate the contribution and offer to help ---
**Author:** ![nicole\_maffeo](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/nicole_maffeo/32/2416_2.png) [@nicole\_maffeo](https://research.lido.fi/u/nicole_maffeo)\ **Post date:** [February 15, 2023, 5:48pm UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/8 "2023-02-15T17:48:54Z")
Cool. Thanks for the reply & yeah makes sense. Good hedge tbh if sell treasury. Worth appending as note in treasury sale proposal? Helps round out some of the concerns tbh. ---
**Author:** ![ErwinSmith](https://avatars.discourse-cdn.com/v4/letter/e/e274bd/32.png) [@ErwinSmith](https://research.lido.fi/u/ErwinSmith)\ **Post date:** [February 16, 2023, 10:47am UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/9 "2023-02-16T10:47:25Z")
I agree, the first vote should be “sell treasury ETH” to secure the runaway the community deems necessary, after it vote on what to do with the remaining ETH (“stake treasury ETH”, if any) and stETH. ---
**Author:** ![steakhouse](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/steakhouse/32/1878_2.png) [@steakhouse](https://research.lido.fi/u/steakhouse)\ **Post date:** [February 16, 2023, 10:54am UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/10 "2023-02-16T10:54:44Z")
imo the first two votes can be concurrent, as the aim is to find an overall policy for any treasury ETH. Logically the most ‘destructive’ option should prevail so If sell 100% wins and stake 100% wins, we will end up with 0% staked but stake 100% of any future ETH that arrives to the surplus for whatever reason. But for the avoidance of doubt we can stagger it too, it just adds a week of delay it’s not that much. The stablecoin proposal should be concurrent with the sale one to understand what to ultimately sell into, if any sell option is selected. ---
**Author:** ![marcbcs](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/marcbcs/32/2659_2.png) [@marcbcs](https://research.lido.fi/u/marcbcs)\ **Post date:** [February 22, 2023, 6:26am UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/11 "2023-02-22T06:26:45Z")
Option 1: Sell each month whatever amount is required to cover operating expenses And do not sell treasury ETH. Definitely feels like this 2 proposals are in reality the same (right pocket, left pocket situation) ---
**Author:** ![nicole\_maffeo](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/nicole_maffeo/32/2416_2.png) [@nicole\_maffeo](https://research.lido.fi/u/nicole_maffeo)\ **Post date:** [February 23, 2023, 4:21pm UTC](https://research.lido.fi/t/should-lidodao-sell-protocol-surplus-steth-to-finance-operating-expenses/3880/12 "2023-02-23T16:21:29Z")
Concurrent makes sense. Easier for community. When snapshot?