TL;DR
Thank you everyone for your feedback and patience. We discussed further with the contributors and explored whether there were other ways to address the concerns raised. After careful discussion, we believe there is now broad alignment among Lido contributors, and that the proposed changes to the TRP program now reflect a middle ground.
Accordingly, we have decided to continue with the proposal to change the TRP as described in the forum post (as now amended to reflect these discussions), with an additional one-time cash payment to all contributors who have been negatively impacted. Also, given the additional time needed for internal discussion to make this post aligned with contributors’ expectations, the new proposed effective date of the new TRP program will be 8 November 2025 instead of 1 October 2025.
We believe this is still the best option that balances the fiscal responsibility to the DAO and the interests of the contributors.
Below is additional context, responses to some of the general feedback in the forum, and additional information. We will respond to unanswered questions in the forum after this response is posted.
BACKGROUND
In 2022, the DAO authorized a pool of 22 million LDO under the TRP program to last until October 2026. At that time, the number of Lido contributors was significantly smaller, and the TRP’s structure reflected that context. The program assumed a slower pace of contributor growth and that the LDO price would not decrease significantly over time.
Since then, several factors have led to an overallocation of tokens. The contributor base expanded more rapidly than anticipated, and the unexpected decline in the LDO price meant that grants calculated referencing USD compensation values required a greater number of tokens. In addition, the TRP included a built-in LDO multiplier tied to contributor levels and base compensation, which amplified this effect.
These challenges were compounded by the lack of clear mandate for overseeing and tracking TRP grants, resulting in an absence of a single accountable person, team or entity. This led to an inadequate monitoring of allocations and, ultimately, to the current situation, where approximately 34.5 million LDO have been committed, exceeding the 22 million LDO originally authorized.
As announced previously, we reduced our spend targeting $31.4 million as our annualized operating budget, resulting in reduction of contributor roles engaged by Lido Labs Foundation and Lido Ecosystem Foundation by 15%. In order to limit it to 15%, it required the TRP program to be changed. If not, we would have had to cut an additional 25-30% more roles on top of the 15%, or find a sizable extra source of LDO for the program.
The following options were considered to address the over-allocation in the TRP program: (i) ask the DAO to approve 12.5 million LDO to be added to the TRP program (which is essentially an increase in the operating budget of that $ amount), (ii) reduce contributor roles by approximately 35-40% from beginning of the year (i.e., an additional 20-25% more on top of the 15% reduced), or (iii) change the TRP program as proposed in this post. All of these options have notable downsides.
Option (i) requires that we ask LDO holders for a significantly bigger budget at a time that we are working towards operating in a more cost-efficient manner, which doesn’t seem like a viable option. Option (ii) meant more contributors would be terminated from their contracts. In order to lessen the impact to the contributor community and DAO-set goals, we are strongly opposed to this option. Teams are already stretched thin and larger cuts could undermine the GOOSE goals we set out to achieve. Option (iii) therefore is still the best option available and one we believe is the most responsible to pursue. This would help to maintain a cost-controlled and financially disciplined organization, and minimize the impact to contributors’ roles.
As part of the changes to contributor compensation, we had also previously planned to change our approach to contributor incentivisation and introduce a new short term incentive, alongside the long term incentive that is the new TRP program. The short term incentive would be in the form of cash or stablecoins, based on individual performance.
In addition, under the new TRP grants, we shortened the vesting period to 2 years from 4 years and removed the 1 year cliff for current contributors. These changes were made in the interest of contributors, while remaining fiscally responsible.
ACTIONS TAKEN
Following the feedback on the forum, we had additional discussions with the contributors and sought ways to soften the impact to those who would be negatively impacted. As a result, we decided to provide an additional one-time cash payment to these contributors, covering the difference between their current total compensation and the new total compensation models for the first year (i.e., from November 2025 to October 2026).
After these discussions, we believe there is now broad alignment among Lido contributors, and that the proposed updates to the TRP program reflect a balanced approach that takes into account the interests of both contributors and LDO token holders.
Furthermore, based on our market assessment, this new total compensation model, when including the base compensation, STI, and TRP, is targeted to be 75th percentile of the market. This ensures that we are competitive and paying contributors at the upper end of the market. We believe this will enable us to retain and hire new talent while being responsible to the DAO.
To prevent a recurrence of such overallocation, we are strengthening our internal controls around grant management. In addition, the finance team at Lido Labs Foundation will assume responsibility for maintaining and administering the TRP program in strict accordance with its terms and conditions.
Regarding the legal allegations made, we strongly disagree with them. From both a technical and practical standpoint, the TRP is a discretionary, non-guaranteed program managed by the grants association. The legal precedents cited are not applicable to the facts and situation here. The services agreement does not provide contributors with a right to a TRP grant. The DAO granted the grants association the right to exercise discretion over the TRP program, including proposed changes to it. These do not give rise to liability for Lido DAO, Lido Labs Foundation, the grants association or any LDO token holder or delegate voting on this proposal. Upon the DAO’s favourable vote, Lido Labs Foundation will be given that same discretion to manage the TRP.
CONCLUSION
Our focus is on what the path is to be fiscally responsible while balancing the interests of the contributors. For the reasons above - namely, to ensure accountability to the DAO and limit the operating budget’s increase, while balancing the impact and fairness to contributors - the proposal to change the TRP program is still the best path forward.