Treasury Diversification #2

Hey guys- wanted to address a few points of contention/debate.

  1. Dragonfly has been committed to this deal with the LidoDAO for the past 2-weeks. We offered a price of 7-day TWAP + 50% before the market rallied and we were prepared to pay way above market price for LDO. Unfortunately, the price rallied. This isn’t our fault and had nothing to do with our activities on the secondary markets.
  2. Our intentions are clear: we are willing to pay above price, we want the team to have more runway, and we are not planning to sell. As mentioned, we’ve been committed to this deal for weeks.

To ease concerns about a sale, we’re willing to revise terms. If the current vote passes, we’re happy to accept the following revised terms regarding price.

The final price of LDO will be the higher of the following:

  1. Previously defined TWAP price + 50% premium
  2. 7-day backward looking TWAP taken at the time of vote completion + 5% premium

Question for those opposing no-lockup: Would you rather LidoDAO (which is in need of runaway) end up with less runway in exchange for a lockup which will ultimately have the same effect on token price since we will not be selling our received tokens anytime soon?

my last post on this forum.

for me, it was never about price. I would prefer Lido sell you the 10mm coins at an even steeper discount, but with a lockup. it shows you are invested in the success of the protocol and not just making a trade to dump on LDO holders. if youre not selling, it doesnt make any sense that you cant do a lockup, as its an industry standard.

Why there is no post from lido official twitter account about this ongoing vote ?

bc we have 75 employees

Spent some more time thinking about this.


Lido needs the cash, but not desperately. There are some alternatives, but it’s not clear if the alternatives are worse decisions. I’m supportive of the idea of raising now.

I do wonder if the raise should be staggered (fill 10m LDO now, fill 10m LDO in 3-6 months). Of course, there is significant price risk by holding for 3-6 months.

If the DAO decided to sell, then I think selling too late is much worse than selling too early.

If Lido sells too early, and LDO continutes to go up, then it could’ve got an extra $10m USD. However, the remaining LDO in treasury will also go up. So really, it’s a constrained to missing out on 10-or-so million dollars.

If Lido sells too late, and LDO turns around and goes down, then Lido could have to sell a lot more LDO to cover runway. Holding much less equity over time puts Lido in a worse position.

So, I would perhaps sell some now for comfort and some a little later. But I do recognise that being “risk on” led to this situation to begin with.


Lido should try to maximise financial returns from this sale. The best execution that Lido can get will be p2p direct trade. Selling on market or OTC will be selling at a discount to current spot prices, maybe of 10-20% due to market liquidity.

So, getting maximum $ from this sale seems like a good idea.

Crypto VCs effectively do nothing, so a “long-term-relationship” is basically a meme (and most crypto VCs are useless such that doing nothing is actually the preferred state).

If you have two main levers in terms: lockup and price then it makes sense for Lido to reduce the lockup lever to increase the price lever.

That said, I don’t think buying below spot price with no lockup makes sense. There is a clear extractive arbitrage opportunity. Dragonfly should either buy a) with a short lockup to eliminate the arbitrage opportunity or b) buy slightly above spot price to eliminate this arbitrage opportunity.

You could model this such that:

deal price = spot price * (f)lockup

Lockup multiplier decreases by 10% for every increasing value of f up to 3.

For example:

  • if f=0 (no lockup) then lockup multiplier is 1.05 or 1.10 → deal price = spotprice * 1.05
  • Or, if f=3 (3 year lockup) then lockup multiplier is 0.7 → deal price = spotprice * 0.7

Right now, extremely long lockups are unattractive to Lido, because Lido wants to maximise $ returns from this sale rather than find long-term partners.

But, zero lockup below spot seems bad too. So, for sales with zero lockup, a small premium to spot price is added.

This premium to spot price eliminates any arb or “free money” extractive opportunities, but remains the best execution price that you could currently get on the market since the slippage/liquidity premium is much larger than the lockup multiplier.

So, it protects Lido, while remaining the best deal for any VC such that they cannot find better terms on market.

The deals that can make sense for Lido here might look like:

  • 0 lockup with 5-10% price premium
  • 6 months lockup at spot price
  • 1 year lockup with 5-10% price discount

Any further lockup and discount would make the sale unattractive, since the goal of the sale is USD runway.


I think it’s a bit fucking stupid that Dragonfly is >95% of the “yes” votes for this deal in the snapshot vote.

Dragonfly voting to give themselves below market price tokens in a contentious vote that obviously does not have alignment on this forum seems like mercenary behaviour, against the best interest of the DAO, and exactly the thing that people on this forum seem to be worried about.

I’m not sure that this self-dealing is a great look. I would’ve expected Dragonfly to abstain from this vote since they have extremely clear conflicts of interest. This is a vote to sell themselves tokens below market price with zero lockup – there are obvious reasons why this would be in Dragonfly’s interest but against the interest of the DAO.

This makes me think a lockup or premium is even more important.


The process for this is horrendous, Lido needs better processes around decisions like this.


The worst case scenario is that no sale is executed and all crypto markets dump hard, Lido struggles with runway and has to deplete treasury hugely to survive, retaining little LDO ownership for the future.

We should avoid that at all costs, pass that risk to others, and secure a sale. But, the sale should be sensible and avoid extractive games at the cost of Lido DAO or LDO holders.


Excellent analysis, thank you @cobie. I agree that under the current circumstances, Lido should favor price over lockups. Hence a model where Dragonfly or any other prospective partner commits to buying a variable amount of LDO for $10m at a price slightly above spot seems best. If I understand @ashwin correctly, then you suggested this yourself as the second option. This option would be acceptable to me.


Thanks for the votes ser

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why not hire a market maker to pump the price of ldo to 5 usd and then dump otc there?

given that the merge is coming and the hype is real, what is the problem with this?

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Why cant lido borrow against its holdings?

Dragon Liquid hedge fund showing a fake bid on the SNAPSHOT vote!!!

They publicly said they cant do that deal, now they are trying to rope people in to split the ‘no’ vote between 1year lockup and needs more work.

Bros if theyre doing this on a snapshot vote, just imagine what theyre trying to do with the LDO. Scam bids and asks all day, fucking lol. ‘we wont sell THAT LDO’, we will just perfectly hedge it out and then manipulate markets with it.

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Market is really unstable right now and borrowing against holdings may be absolutely ruinous. It should certainly be considered as a part of the way to fund ongoing operations once Lido can set up proper treasury management, but I don’t think it’s a viable option in terms of securing minimum runway.

this is message to the 0x641cE4240508eae5dCaeffE991F80941D683Ad64.
Why did the Snapshot voting begin immediately after receiving the LDO token?

No tweets abt the vote + 3 option vote (when one is a non option, and the ‘no’ isnt a rejection of the deal, its ‘nEeDs MoAr WuRk’) = something odd

@TheDude I would honestly like to hear your plan laid out how to quickly, and efficiently get the best price for LDO considering the risks of waiting and trying to perfect the deal.

If not DragonFly, do you have a buyer ready to go and agree to pay a premium?
If a lockup, is that the maximal capital for Lido to raise today?

You say it was never about price and that is fine, for me it is about price. Who is right? Sounds like we need to have a vote (which we are). Then you seem to be missing the fact that we are only discussing 50% of the targeted total sale after community feedback. This first part is to take risk of the unknown off the table. That gives Lido time to make a better process for the next and potential future sales.

Finally, do you run a fund? I would really like to understand the legal restrictions that come with different fund structures and relevant jurisdictions around the world. DragonFly has multiple funds. Some are liquid funds and some are venture. They are not the same structures. a16z had to restructure the entire fund in order to accept and invest in crypto. Also, Lido is a conservative protocol. We are not willing to make impulsive legal or technical risks, there is too much at stake (kek).

A public sale puts us at risk from a legal perspective. That takes time to find the best path.

If Dragon Liquid can’t or won’t do it, Dragon Ventures is also in the discussion. Don’t assume you know every detail while posting on the forum and antagonizing anything anyone says.

I am happy to hear opinions. They are like buttholes, everyone has one. What I would prefer to see from the community are constructive thoughts and proposals to make this process better.

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To bring the thread back to a more concrete discussion. What are thoughts about the updated proposal from DragonFly?

Does the community care more about the lock up or maximal sale price?

Based on the current vote results: Snapshot

It looks like the proposal will not pass. Now, we will wait til Monday and open a new vote. This will be a traditional 7 day vote structure to allow everyone to chime in. This puts us at August 1st + time to close on the final outcomes.

In the past 7 days, LDO has gone from $1.32 > $1.51 at this time (14% difference). With a max of $1.78 (34% difference). The same may happen over the next 7 days and if other buyers are still interested they will renegotiate the terms based on data at the time. Hopefully LDO goes to $10 and I am an idiot. Now that everything is fully public and open, anyone on the market can manipulate the price, keeps things spicy.

So that being said, what does everyone think the new terms of the proposal should be?

  • Spot with Lockup?
  • Premium with no lockup?
    • How much premium?
  • Whitelist? Are certain investors not allowed to participate?

Let’s focus on how to move this proposal forward please.

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i nomiate cobie for CFO

Spot + Lockup

Secure the bag

No Whitelist

Ban @TheDude from this message board

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What about a community led treasury diversification?
Could be done using
Lockup + Discount

also, if a 7 BTC market buy order is placed on binance, this would throw off the orderbooks and likely send it

the usdt volume is significantly larger, but the btc volume isnt there

this might be an interesting move to pump it 5x in btc for only 150k usd (7 btc equivalent)

Concrete steps to move forwards, in my opinion (disclosure: I am dumb):

  • Proposal should be either small spot premium (+5-10%), or spot price (past 7d avg) with a short lockup. I don’t really care which one. I care about removing the obvious and immediate adverserial incentives. DF or the DAO can decide or whatever. I think spot premium but unlocked is sufficient but can see why people would be more emotionally attached to a lockup.

  • Vote should be binary. The current vote is a strange three option vote, without a clear “rejection” option. The vote should simply be to agree or to reject the proposal – and in turn the proposal itself should be clear.

  • Open the sale to whoever wants to be included. I am sure there are some issues with KYC/the law/etc here. But where that can be handled we should open the sale up as much as possible to a wider group. Ideally, anyone could buy on chain at these terms. However, maybe a practical solution is just whitelisted entities since KYC/etc may be hurdles that prevent such a solution at this time.


legally speaking, for open sale not open to US residents + block usa IP address

business wise speaking, hurry up and close this to secure the runway or else ethereum as we know risks too much