Treasury Diversification #2


For background

This proposal is looking to secure ~2 years of operating runway for Lido DAO, in stable coins. This will ensure Lido and its core contributors are able to continue the important work needed for the protocol in the long term and to flourish as an autonomous, self-governing collective.

To secure the operating runway we propose that Lido sells 2% of the LDO token supply from the DAO treasury (20m LDO) at a 7-day TWAP (time weighted average price) with 50% premium. Put simply this is a rolling 7 day average plus a 50% premium.

Lido DAO has already been approached by a number of interested parties, with Dragonfly Capital keen to lead this round. A benefit of selling to Dragonfly and to others joining the DAO, is their presence will help guide development, facilitate vertical integration of stAssets in the DeFi ecosystem and further cement Lido’s position as the market-leading solution for liquid staking.

We believe this will benefit Lido and propose to finalize these transaction terms in a Snapshot vote to execute the deal in the coming week.

Speed of execution is a priority due to continued uncertainty in the market. As such, we will begin a snapshot vote in the coming hours in order to finalize things in the next week.


Outside of the above mentioned operating needs, we are considering Dragonfly to provide support for DeFi projects and in-house expertise. Dragonfly has been a premiere participant in the DeFi ecosystem uniquely positioned to lend its expertise to LidoDAO governance and serve as a liaison to other DeFi project teams who can help further decentralize LidoDAO’s community.

The other strategic partners who will acquire LDO in the transaction will play a similar role.

Purchase Structure


We jointly propose the following terms:

  • 20M LDO (2% of supply) to be sold by the DAO treasury at a purchase price equal to $29,043,051.43 in $DAI stablecoin.
    • Dragonfly Liquid to acquire 1%, or 10M LDO.
    • 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.
  • Acquired tokens will be unlocked.
  • Full voting power will be granted immediately upon closing of the sale


We believe this is an appropriate marketable price for LDO to provide these new strategic partners with “skin in the game,” enabling them to become independently incentivized participants in the LidoDAO.

Factors we have taken into account in proposing the price at which LDO are to be sold include:

  • This immediately provides the DAO with runway while also putting a buffer in place to disincentivize immediate selling pressure. This of course is highly dependent on market conditions which is the risk we are facing currently.
  • Value-add: We believe Dragonfly and other strategic partners will be valuable to the future decentralization and growth of Lido’s ecosystem.

We are at the same time, working to build out a governance dashboard in order to track the activity of LDO holders so that we may hold them publicly accountable if they intend to be a part of the community.

About Dragonfly

Founded in 2018, Dragonfly Capital is a global, crypto-focused investment firm that is led by crypto-native investors who have been successfully investing in crypto for over 4 years. The Dragonfly portfolio includes foundational protocols and companies such as MakerDAO, Compound, 1inch, dYdX, Avalanche, ByBit, Matter Labs, and more. The firm’s crypto-native investment and research team is uniquely qualified and deeply versed in token economics, game theoretics design, and technical architecture. Many are founders and engineers who have innovated on decentralized exchange architecture, protocol consensus and algorithmic stablecoins.


2 initial comments.

I must insist Lido receives stables this time, not ETH.

Could you outline Lidos 12 - 24 month growth prospects and plans to achieve them? While we have a decent view of on chain PnL, we have little visibility into forecasted growth. I believe this info is necessary to evaluate the above proposal.


Ah good catch, just made a small edit to state we are selling for $DAI in the treasury. That was the plan but not explicitly stated!

Growth Prospects: This is something I am working on and is extremely hard to plan for due to market volatility. I should have a publishable version in the coming week. There are some considerations and strategic initiatives that are not public due to competition but the general strategy and go to market will be defined.

The current proposal is assuming a steady state to ensure survivability and security for Lido independent of further market actions.


This is something you + Mark (Aes) are supposed to help us out with - lets get better aligned?


so there is no lock period and vesting?


Pass as soon as possible, don’t miss the best time like the last proposal to sell ETH.



The default should be NO unless there is a compelling reason. The precedence set by the previous exercise was 1 year cliff + 1 year unlock.

Don’t all the tokens have full voting power regardless if they are locked or unlocked?


“skin in the game” argument is so mute when most VCs are profit mercenaries.

Selling to them at these prices without unlock literally giving VCs free money. Seems prudent to be cautious in a bear market but not supporting anything without vesting.


What’s the rational of 0 locking period?


Should be locked.

But the 7-day TWAP at 1.45 a coin seems like this was already agreed over a week ago between team and funds.

Tbh it should be vested over 10 years if we want an actual partner/believe in the project. A16z publicly say they invest invest with a 10 year timeframe, so I don’t think this is a big ask.

Fwiw, today your own cofounder said theres max 5 vcs that are helpful, and he didnt list dragonfly… (


Maybe we can split the voting:

  1. To sell 1% to Dragonfly by current price
  2. To sell 1% to others by current price

When Lido DAO have commitments from others the price can go up, and sell liquid tokens without lock up cheaper than on the market is bad idea.
I recommended that we should add that the price for Other strategic participants should be not lower than the price on a day of publishing the list of participants.

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-Dragonfly Capital was part of the first treasury diversification, can they explain what they did to help Lido since then? How many of those tokens are they holding?

-Why no lockup?

-Who are the other strategic participants?

Last treasury diversification was a complete disaster for the most part. Most of the so called VCs and angels did nothing but open their wallets every few weeks to dump their allocations. Even worse, a few of them turned out to be scammers/fraudsters (3ac), ran the biggest ponzi the crypto industry has seen (LUNA/UST with the help of Delphi, Jump, 3ac/Defiance), destroyed a big part of the crypto industry. We also got in the list folks from Divergence which ran a “VC”, in reality all they did was sybil airdrop of their own portfolio companies.


For everyone here worried about a potential lock-up, these investors are buying at market price.

It would be absolutely tough to have a lock-up if this is the pricing mechanism & obviously the investors won’t “dump” because given the liquidity they’d take a loss.

This is a bit of a no-brainer at $1.45 so you maybe update the pricing to sell at like $1.60 and investors would take that deal (LDO in demand).


Previous cases offered a material discount. Literally anyone could have been buying LDO for the last few weeks at 1/3 of this price. Sure, a 1-month lockup for this discount might technically be the right thing to do but the reputational damage of immediately dumping is a sufficient deterrent for expedience sake.

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If you are buying at market price but OTC from the initial entity it should still have a lock.


  1. These LDO are coming from the initial entity and do not currently exist in circulation.

  2. The OTC buy, really isn’t “market price” because you can’t buy that much LDO easily without moving the price. So buying “at-rate” is actually discounted in the block trade.

I do think LDO should sell some tokens into stables to ensure runway, but I think it’s entirely fair to ask for a small lockup, a one-year lock-up is pretty easy to stomach for a long term investor.


You are right, reacted too quickly on this. There is a discount to buying 2% of supply without it hitting the books.

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This works both ways. If treasury wants to sell 20M LDO on open market at this price they may not be able to do it. There is also an obvious problem for a DAO disclosing publicly that they are going to somewhat urgently sell 2% of supply. Maybe Dragonfly is willing to do 1 year lockup out of goodness of their hearts but at some point they just say “fine we’ll build our position in the market”. Maybe next week sky is falling again and Lido is desperate to fix runway problem. Just get the deal done.

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Let them build their position in the market (as retail has done).

They’re not listed by the cofounder as one of the 5 funds that help, so they shouldnt get special treatment.

Selling at the lows makes no sense, with bullish events on the horizon.

Just sell 54,794 LDO a day. That would be equal to 20M a year, and the treasury would probably end up with more stables by doing this DCA’d over a year.

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I agree, that is PROBABLY true. But the thing with treasury management is PROBABLY isn’t good enough. You have to be ready for worst case scenario. Mistakes were made last year to be in this position but we can’t change that. An entity of Lido’s importance not having $30M of cash in treasury is a joke and needs to be fixed immediately.

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its for 2 years runway, so you could just set up something to auto sell 16 LDO a minute on binance. They need $30mm over 2 years, not right now (as far as i understand, its a linear burn rate).

Probably wouldnt be that much sell pressure. and because this is a sought after monopoly protocol, it forces funds to build their position in the market. I would imagine its a net positive for price, as funds want to build positions quicker than over 2 years.

The broader crypto community needs to stop cutting deals with people that are good with wiggling their ways into vc deals, but dont help at all. If its one of the most helpful funds, then fine. But i dont see any evidence of helpfulness.

Its possible jordan just forgot to mention dragonfly, so if he or other cofounders put something out saying theyre helpful i would obviously change my opinion.

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