# Treasury Diversification #2

**URL:** <https://research.lido.fi/t/treasury-diversification-2/2570>\
**Category:** Proposals\
**Created:** [July 18, 2022, 5:54pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570 "2022-07-18T17:54:33Z")\
**Posts on this page:** 20\
**Page:** 3

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**Author:** ![Periphery0x](https://avatars.discourse-cdn.com/v4/letter/p/96bed5/32.png) [@Periphery0x](https://research.lido.fi/u/Periphery0x)\
**Post date:** [July 20, 2022, 3:27am UTC](https://research.lido.fi/t/treasury-diversification-2/2570/41 "2022-07-20T03:27:25Z")

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Supportive of the general premise of the sale and agree that 1-year lock would be appropriate. A few points:

> [@cobie](#):
>
> It would be good if this diversification event was available to everyone, rather than gatekept to VCs. It should be still limited on total size. Maybe theres some KYC stuff that makes this unattractive?

Providing an opportunity for LIDO supporters to buy concurrently with VCs (especially when such VCs add limited value according to Cobie) would be a positive for the community. The key challenge would be how do you prevent this from being botted (i.e. Alameda “we did indeed buy all of the tokens” for Stargate Finance).

> [@jbeezy](#):
>
> Price calculated for this proposal is $1.452153 USD per $LD

Given price is ~15-20 cents above $1.45 , would the calculated price be adjusted depending on when the proposal is passed? If the tokens are unlocked, this is a key issue.

> [@jbeezy](#):
>
> Other strategic participants to acquire the remaining 1%, or 10M LDO tokens, with the exact makeup of this group to be proposed to the dao for approval

1% of the total tokens is significant and as such, if these “strategic participants” are known, they should be revealed to the community so that their previous track-record related to such token sales can be transparently evaluated and examined.

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<div class="post-metadata">

**Author:** ![McNut](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/mcnut/32/4090_2.png) [@McNut](https://research.lido.fi/u/McNut)\
**Post date:** [July 20, 2022, 4:06am UTC](https://research.lido.fi/t/treasury-diversification-2/2570/42 "2022-07-20T04:06:45Z")

</div>

Today, operations are profitable, excluding LDO dilution. After (if?) the recent budget proposal, Lido will be in the red by several hundred K USD / month, until ETH pushes north of ~2k.

You can reference the financial dashboards for historical reference. The proposed budget is not factored in here and should increase spend by 3-4x / month.

> **[Dune](https://dune.com/damcnuta/lido-dao-financials)**
>
> Blockchain ecosystem analytics by and for the community. Explore and share data from Ethereum, xDai, Polygon, Optimism, BSC and Solana for free.

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<div class="post-metadata">

**Author:** ![llamacorn](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/llamacorn/32/1310_2.png) [@llamacorn](https://research.lido.fi/u/llamacorn)\
**Post date:** [July 20, 2022, 6:43am UTC](https://research.lido.fi/t/treasury-diversification-2/2570/43 "2022-07-20T06:43:54Z")

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3 quick points

1. where to vote, i will vote NONONONO
2. if dragonfly wants to buy unlock tokens, pls buy at a high price to prove they will be a long-term supporter
3. to the team : why do always want to sell your tokens at the bottom?

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<div class="post-metadata">

**Author:** ![LIDO](https://avatars.discourse-cdn.com/v4/letter/l/e47774/32.png) [@LIDO](https://research.lido.fi/u/LIDO)\
**Post date:** [July 20, 2022, 1:53pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/44 "2022-07-20T13:53:53Z")

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sir cobie, your highness

1. as per satoshi, the technology is money. what you are claiming is that we should go easy bc the technologists built something great \< – yes they did the biggest staking service, yay. they also have no idea how to manage money. you are equivocating startups to hedge funds which i find comical b/c the lido leadership actually decided to try to be a hedgefund by keeping it in eth, knowing that its the most volatile asset there can be. instead of converting at least some of the 70 mm usd equivalent eth into stable asset, they chose to gamble. so it would seem that they actually tried playing it as an on chain hedge fund. this amounts to gross negligence.

why did i not advise them to sell? well like the idiot that i am, i had assumed given the amount of hype and praise u gave to lomashuk, vasily and yourself regarding lido that it was self evident that you are building mission critical infrastructure to ethereum and u should secure a runway. but thats where i was wrong.

notably, stake hound at the peak lost the keys to appx $80 mm usd in ether. here we have vasily our fearless leader pissing on them for it. [https://twitter.com/\_vshapovalov/status/1545249802706878464?s=20&t=eZ\_2GQr6fGrcuZRXcrGMSw](https://twitter.com/_vshapovalov/status/1545249802706878464?s=20&t=eZ_2GQr6fGrcuZRXcrGMSw)

Note that Vasily as CEO has helped destroymore than half this amount of value by gambling with ether (4,000 usd ether to 1500 usd ether at 70 mm usd raise in ether) - after vitalik publicly announced he is selling on coinbase. and now were gonna sell 2 mm LDO to more scumbags, so were close to $80 mm, nice job bro.

1. why did you not advise them? i love how you try to distance yourself from the project all the time. you are a founder of Lido and were once the CEO. I bet that you hold approximately 20 million LDO tokens. this is your baby. but fine you did not. Lido leadership chose to gamble at the top over securing a runway, after vitalik publicly sold ! Yes go thru governance, would had months to have it cleared. Alameda is another group of known scumbags, effective altruism baby! lets create perpetual contracts on real shit coins like Oxygen that are down only. Yo cobie, terrible analogy. another group of sociopaths happily welcomed into the dao.

2. 3ac, defiance, jump, [insert scumbags here] - no one could have seen it, but they are dumping. wormhole deployer 4 has been dumping this whole time (which is jump). LDO was and currently kinda is very illiquid. these scumbags have been dumping (see this post for dumping details [The $LDO whale unlock - OTC - time to get organized](https://research.lido.fi/t/the-ldo-whale-unlock-otc-time-to-get-organized/1852) ).

Lido is a startup and these pieces of shit cant stop harming it. Long term alignment is at least 4 years lock up, lol but u legendary founders had maybe 1-2 years lock up lol … so what am i saying. crypto is not a real place, but wow what the fuck was the point of raising 70 mm usd in eth, giving so much ldo to these scumbags, these scumbags dumping it and then destroying more than half of the 70 mm usd. like u got in bed with we’ll call it scumbags that were not known to be scumbags at the time with a sweet heart deal and then did not prepare for worst case scenario and got rekt lol.

this is where its clear that the Lido leadership is economically not competent as either amateurs (could not prepare for worst case) or degenerate gamblers (kept it all in eth).

1. 75 employees - lol

roles that should be collapsed into lesser roles for efficiency, god this project has hte most misaligned incentives ive ever seen. unicorn created from day 1 with basically no lock up with the advent of the scam pump market maker - lol im laughing really hard as i write this, crypto greatest place

Business Development  
Marketing  
Analytics  
Ecosystem Support  
HR (lol)  
Legal & Operations  
Product Management  
Finance  
OpEx General  
Emergency Relief lol! its own position i love you jesus christ  
Opex Eth Bug Bounties  
Opex Marketing Expenditure

I’d like to point out that im a lawyer with a background in global finance crpyot OG from 2013, have created a multi million USD supplement business and published the most viewed scientific white paper in human history. I am not bragging, im just a regular idiot person, but i care and i care deeply to make startups work and am willing to scarifice to do it. I’ attended Stanford Medical School without being enrolled and slept in my friends car, dont spend any money except bare necessities over a 8 year period (crypto from 2013 to 2021) cuz thats what it fucking takes to make it. These positions are designed as if Lido is a Fortunte 500 company, not a lean start up.

1. Liquidity Flows - here’s the great secret of crypto = almost ALL of the pumps are scams done by market makers. Market caps are psyops and dont really matter. What matters is how illiquid a token is and who is the market maker behind it. You think Solana organically pumped to $250 usd from $3 ? lololololol. same with scam Luna, Avax and all the rest. so out of the blue, LDO needs to sell a bunch of tokens and it pumps from .5 USD to 1.85 in 10 days. lol

literally fuck u guys

who was the market maker and when will they be dumping

ahahahahahahahahahaahahahaha

see u on the moon cobie

p.s. be nicer to ledger, up only is the greatest podcast ever. i think su zhu is a legend and im not joking. learned so much from the guy. u learn the most generally speaking from criminals and sociopaths, they are generally the big winners of the MSM life …

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<div class="post-metadata">

**Author:** ![banterlytics](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/banterlytics/32/1572_2.png) [@banterlytics](https://research.lido.fi/u/banterlytics)\
**Post date:** [July 20, 2022, 2:03pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/45 "2022-07-20T14:03:23Z")

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Doesn’t the liquidity issue means they would have to pay more if they were going to market buy 10M tokens?

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<div class="post-metadata">

**Author:** ![jbeezy](https://avatars.discourse-cdn.com/v4/letter/j/dbc845/32.png) [@jbeezy](https://research.lido.fi/u/jbeezy)\
**Post date:** [July 20, 2022, 2:21pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/46 "2022-07-20T14:21:52Z")

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Busy busy thread.

@LIDO thank you for continuing to express your passion around Lido and wanting it to succeed in the long run. That passion is similar to why I joined Lido to work in the first place. We have certainly made mistakes and can try to learn from them, or not.

That being said, all the constructive notes and feedback in this thread are welcome’d and encouraged, we are discussing all of this.

> [@cobie](#):
>
> Not selling ETH to USD was an avoidable mistake. Lido should’ve sold ETH to USD gradually when ETH was higher. It was an avoidable mistake. Now they have to sell 2% of LDO to compensate for that mistake. They should learn from that and hire a good CFO to avoid these mistakes in the future.

Moving past the shoulda, woulda, coulda at ETH $4K and understanding the life lesson as @cobie mentioned, we are in agreement with the following:

- We have been searching for potential finance person for the past few weeks. Valuable, expensive lesson on treasury management.
- We need to take a look at our head count, we are finalizing the foundation structure so this is an order of operations issue.
- reWARDS optimization committee is underway and working on this currently. @Chuck and @McNut have already stepped up to help.

However, the fact is that Lido cannot operate in uncertainty.

These are the key considerations to move fast:

- Service disruption if we have to layoff critical members
- People leave due to fate of job security at the whim of the market
- Suffocation by trying to min/max and optimize the sale (bureaucracy). The market is pricing in ETH merge beta, I expect a buy the rumor, sell the news scenario, especially with the global macro market. ETH to $500 puts us in a worse position.
- Community & KYC: We are discussing opening up a portion to everyone/community but it comes with legal risks that have to be sorted and adds to the timeline. This can always come after getting some funds secured.
- DragonFly was the first to step up and publicly commit at the time 50% premium above TWAP and move quickly on this. Everyone else is still thinking about it and this opens Lido up to risk (see above).

Final considerations:

- If we leave money on the table, community gets pissed by selling low.
- If we keep shifting the deal terms in a highly volatile market the buyer(s) walk.

I will give this a few more hours before opening a snapshot with the added considerations of limiting this to 1% **today** and another 1% (or whatever) at a future date and appetite for a vesting period.

This will come down to a vote based decision.

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<div class="post-metadata">

**Author:** ![LIDO](https://avatars.discourse-cdn.com/v4/letter/l/e47774/32.png) [@LIDO](https://research.lido.fi/u/LIDO)\
**Post date:** [July 20, 2022, 2:27pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/47 "2022-07-20T14:27:26Z")

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eth going over 2k… some eth can be sold there

for the 10 - 20 mm ldo tokens being sold, make sure there is a lock up

sorry if i come off like a jerk, but literally the future of ethereum is at stake pun intended

if lido goes down, binance, coinbase, etc take over all staking

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**Author:** ![gin403](https://avatars.discourse-cdn.com/v4/letter/g/74df32/32.png) [@gin403](https://research.lido.fi/u/gin403)\
**Post date:** [July 20, 2022, 3:10pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/48 "2022-07-20T15:10:45Z")

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I think DragonFly should be locked for at least 1 year, otherwise there is no guarantee that he will sell after a short-term profit.

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**Author:** ![TheDude](https://avatars.discourse-cdn.com/v4/letter/t/d6d6ee/32.png) [@TheDude](https://research.lido.fi/u/TheDude)\
**Post date:** [July 20, 2022, 4:09pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/49 "2022-07-20T16:09:56Z")

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thats fair. thanks for the replies.

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<div class="post-metadata">

**Author:** ![TheDude](https://avatars.discourse-cdn.com/v4/letter/t/d6d6ee/32.png) [@TheDude](https://research.lido.fi/u/TheDude)\
**Post date:** [July 20, 2022, 4:13pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/50 "2022-07-20T16:13:27Z")

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deleted bc i dont wanna fight tbh

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<div class="post-metadata">

**Author:** ![LIDO](https://avatars.discourse-cdn.com/v4/letter/l/e47774/32.png) [@LIDO](https://research.lido.fi/u/LIDO)\
**Post date:** [July 20, 2022, 4:17pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/51 "2022-07-20T16:17:54Z")

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thank you

let me know when ur work is published by elon musk

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<div class="post-metadata">

**Author:** ![ashwin](https://avatars.discourse-cdn.com/v4/letter/a/f08c70/32.png) [@ashwin](https://research.lido.fi/u/ashwin)\
**Post date:** [July 20, 2022, 5:45pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/52 "2022-07-20T17:45:45Z")

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Hey guys - it’s Ashwin from Dragonfly. Appreciate the constructive discussion, and wanted to share our team’s view on this proposal.

The primary purpose of the proposal is to ensure that the LidoDAO has adequate runaway in the case of continued market volatility. The LidoDAO currently has ~75 full-time contributors with annualized operating costs totaling $16-18MM. In our view, it’s critical for the LidoDAO to have ample stablecoin reserves to meet its payroll obligations over the next 18-24 months.

Dragonfly has been an active supporter of Lido since we participated in the first treasury diversification round last year. However, due to the constrained allocation for funds outside of Paradigm, our support has been limited to strategy calls and specific requests from core Lido contributors.

That said, we’re long-term investors and are looking forward to being more active in governance assuming this diversification proposal passes. We have never sold any of our purchased LDO from the previous round (despite unlocks), and do not intend to sell LDO purchased from this treasury sale at any point over the next few years.

We have the following additional thoughts on lockup terms/pricing:

1. Regarding Price  
a. If the LidoDAO were to market-sell 20M of LDO, its average execution price would be far lower than the current market price due to inconsistent liquidity and advance market knowledge of the sale. This will result in high price slippage if the tokens are sold within a short timeframe.  
b. The LDO price increased by ~245% in the past 7-days. Given this volatility and the inconsistent liquidity (daily trading volume fluctuates between 50-150m a day), we believe the pricing methodology used is fair (7-day backward TWAP with a 50% premium).  
c. **Thus, we are not open to changing pricing for this sale.**

2. Regarding Lockup  
a. A more traditional deal offering a discount on LDO tokens in exchange for a lockup would result in a lower sale price given interest expressed to Dragonfly/Lido by other potential sale participants. This would result in far less operating capital for the LidoDAO unless the LDO sale amount is increased.  
b. The entity we’re using to purchase LDO tokens from the DAO has liquidity restrictions. This means it’s difficult for us to invest in illiquid token deals, hence the no-lockup structure of this deal.

We’re committed to honoring the result of a vote. However, since we cannot guarantee the participation of additional parties, **we recommend splitting the vote into two parts.** Part One will be a sale of 10m LDO to Dragonfly at the posted price + premium. Part Two will be a separate sale of 10m LDO to additional participants with different terms.

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**Author:** ![TheDude](https://avatars.discourse-cdn.com/v4/letter/t/d6d6ee/32.png) [@TheDude](https://research.lido.fi/u/TheDude)\
**Post date:** [July 20, 2022, 6:39pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/53 "2022-07-20T18:39:09Z")

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> [@ashwin](#):
>
> We have never sold any of our purchased LDO from the previous round (despite unlocks), and do not intend to sell LDO purchased from this treasury sale at any point over the next few years.

respect. but its well within your right to sell unlocked tokens. if theres no intention to sell for a few years, i dont think a 3 year lockup is unreasonable as it will yield the same result for dragonfly but garner more trust from the community.

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<div class="post-metadata">

**Author:** ![LIDO](https://avatars.discourse-cdn.com/v4/letter/l/e47774/32.png) [@LIDO](https://research.lido.fi/u/LIDO)\
**Post date:** [July 20, 2022, 6:48pm UTC](https://research.lido.fi/t/treasury-diversification-2/2570/54 "2022-07-20T18:48:28Z")

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eth is going back over 2k shortly

there should be a 3rd vote to sell a bunch of eth coinage there to at least get thru the end of the year (likely bottoming)

also, get the head count down from 75 lol … 75 people !

dragonfly aint the only game in town

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<div class="post-metadata">

**Author:** ![mistapie](https://avatars.discourse-cdn.com/v4/letter/m/b77776/32.png) [@mistapie](https://research.lido.fi/u/mistapie)\
**Post date:** [July 21, 2022, 4:39am UTC](https://research.lido.fi/t/treasury-diversification-2/2570/55 "2022-07-21T04:39:24Z")

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Two thoughts:

1. This seems like a fair deal. Putting on the tradfi hat, the clear parallel here is to equity secondary offerings and PIPEs. Typically secondary offerings are priced at a discount to the current price (LSD% discount most common) with no lockup. PIPEs are at a greater discount but come with lockup provisions and typically operational involvement. The need here is purely financial, so its more like the former (a secondary).

2. I don’t think LDO needs to do this. Granted, I’m a mega-bull, but assuming Sept merge and using reasonable assumptions around what staking yields will jump to (let alone the potential for step function increase in ETH staked), one can come to the conclusion that LDO will become highly profitable on a run-rate basis. My model suggests LDO could still be breakeven at $750 ETH (on a cash basis excluding token emission dilution). Also valid pushback would be that stETH has risk and maybe shouldn’t be sold prior to withdrawals being enabled.

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<div class="post-metadata">

**Author:** ![satBalwyn](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/satbalwyn/32/1673_2.png) [@satBalwyn](https://research.lido.fi/u/satBalwyn)\
**Post date:** [July 21, 2022, 5:16am UTC](https://research.lido.fi/t/treasury-diversification-2/2570/56 "2022-07-21T05:16:41Z")

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My 2’ cents:

1. I don’t agree Lido selling $LDO into stables in the secondary market. Not sure who can handle this stuff now in Lido and don’t want Lido to be a TradFi in this case. From this point, I agree to settle a new deal directly.
2. It makes perfect sense to have multi Votes for different investors. Lido dao internally got enough information about them (bg and others) but the community  
as LDO holders needs to know more as well.
3. About the revenue, Lido revenue is pretty clear now. However, plz go through [this](https://research.lido.fi/t/redirecting-incoming-revenue-stream-from-insurance-fund-to-dao-treasury/2528/22) . We need to hold some revenue for the slashing insurance fund especially before the success of the Merge2.0. Also, Lido is still at the early period (18 mths) and needs more liquid funds for development (admittedly, $LDO is illiquid).
4. As @jbeezy said, Lido made some mistakes before but learnt a lot as well. We need more encouragements and construstive participations and suggestions.

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<div class="post-metadata">

**Author:** ![adcv](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/adcv/32/1766_2.png) [@adcv](https://research.lido.fi/u/adcv)\
**Post date:** [July 21, 2022, 9:56am UTC](https://research.lido.fi/t/treasury-diversification-2/2570/57 "2022-07-21T09:56:18Z")

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> [@mistapie](#):
>
> My model suggests LDO could still be breakeven at $750 ETH (on a cash basis excluding token emission dilution)

Had a similar pov on a $5m run rate for operating expenses, $15m pushes it to 2000 ETH breakeven

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<div class="post-metadata">

**Author:** ![ErwinSmith](https://avatars.discourse-cdn.com/v4/letter/e/e274bd/32.png) [@ErwinSmith](https://research.lido.fi/u/ErwinSmith)\
**Post date:** [July 21, 2022, 11:00am UTC](https://research.lido.fi/t/treasury-diversification-2/2570/58 "2022-07-21T11:00:55Z")

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The DAO should start by cutting expenses and headcount, if that’s not enough, make a call for VCs, funds, accredited investors, retail. Why was all of this done behind closed doors?  
If Dragonfly plans to hold for many years, they shouldn’t have any issue agreeing to a lockup. They were in the first treasury diversification and couldn’t list a single thing they helped with, except “strategic calls and specific requests”, which was the whole point of the first round. Now all of a sudden they are looking forward to being more active if this passes…

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<div class="post-metadata">

**Author:** ![zuzu\_eeka](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/zuzu_eeka/32/1157_2.png) [@zuzu\_eeka](https://research.lido.fi/u/zuzu_eeka)\
**Post date:** [July 21, 2022, 11:43am UTC](https://research.lido.fi/t/treasury-diversification-2/2570/59 "2022-07-21T11:43:26Z")

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🗳 Snapshot vote ‘Treasury Diversification #2 - DragonFly’ has been created!  
Please, cast your votes!  
Ends on: 25 Jul 22 19:00 UTC  
[https://snapshot.org/#/lido-snapshot.eth/proposal/0xede83acfa2d3afd2a0109bb437073c5424bcc576bbe32e51a5cdee9ecd6cebee](https://snapshot.org/#/lido-snapshot.eth/proposal/0xede83acfa2d3afd2a0109bb437073c5424bcc576bbe32e51a5cdee9ecd6cebee)

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<div class="post-metadata">

**Author:** ![Chuck](https://dub1.discourse-cdn.com/flex013/user_avatar/research.lido.fi/chuck/32/32_2.png) [@Chuck](https://research.lido.fi/u/Chuck)\
**Post date:** [July 21, 2022, 11:51am UTC](https://research.lido.fi/t/treasury-diversification-2/2570/61 "2022-07-21T11:51:51Z")

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Here is an alternative for the fund raise.

1. Create a series of NFT with 100 items. Each item represents 100K $LDO that can be claimed from treasury 3 months after the item was sold.

2. Quarterly sold 25 items on OpenSea via dutch auction mechanism.

3. The NFT sales can be paused before each round if the income can fully cover the expenses, or we have other better alternatives.

Pros:

1. Give everyone a fair chance to participate in the fund raise event.

2. Somehow create a future for $LDO price discovery.

3. More flexible than sale 10MM $LDO in a single deal.

[Previous page](https://research.lido.fi/t/treasury-diversification-2/2570.md?page=2)

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