According to the results of a vote that was held over the weekend and finished on Monday, the members of the Lido Finance community have rejected a proposition to sell 10 million LDO tokens to venture capital company Dragonfly Capital for $14.5 million. The vote on Monday concluded with approximately 600 DAO members, who collectively represented 43 million Lido DAO (LDO) tokens, voting against the plan.
This number was equivalent to 66% of the votes that were cast. In the meantime, there were just two addresses that voted in favor of the token sale, which added up to a total of 21 million LDO tokens. A plan to diversify Lido’s treasury is being considered, and the token sale is one component of that plan. The proposal put up by the DAO called for the sale of 20 million LDO tokens, with the proceeds of half of those sales going to Dragonfly. The sole purpose of the most recent vote was to decide whether or not to move through with the token sale to Dragonfly.
Lido Under Severe Criticism
A great deal of criticism was voiced in response to the proposal that Lido had to sell these coins to Dragonfly without any lock-up obligation. The identity of the whale wallet that initially supported the proposition led to discussion around the possibility of a conflict of interest. After Monday’s vote is concluded, the Lido team will need to continue developing the idea. It is yet unclear whether the DAO will vote on the remaining portion of the plan.
In addition, another proposal concerning treasury management is currently being considered by Lido. This transaction involves the conversion of 10,000 Ether from the project’s treasury into stablecoin. It possesses 158 million LDO tokens ($251 million), 20,940 ETH ($32 million), five million staked Ethereum ($7 million), as well as limited amounts of some of the other currencies. In the event of a lengthy market collapse, a Lido Finance core developer has proposed that the company’s governance platform liquidate $17 million worth of Ether (ETH) from its treasury reserves.
The developer, who goes by the name Kadmil, made a suggestion that the governance platform, which is known as Lido DAO, should invest around half of its ETH in stablecoins in order to finance Lido’s operations for the next two years. The proposal suggested that the treasury funds should be sold to DAI for a total of 10,000 ETH. This should cover around two years of spending for a 50-person team and protocol upkeep.
Potential Operational Crisis For Lido DAO
Kadmil voiced concern that the DAO would have significantly fewer funds for operational overhead and repayment of DAO participants in the event that the price of ETH continued to plummet in the future in comparison to the US dollar. Lido Finance is a protocol for liquid staking that gives users the ability to unlock the value of tokens they have staked in order to improve their capital efficiency. It is now the most popular protocol for liquid staking on Ethereum.
Kadmil claims that Lido pays its operational expenditures with stablecoins such as USDC, while LDO tokens are primarily used to compensate liquidity providers and provide referral bonuses. As a result, the proposal centered on the idea of selling only half of the unstaked ETH in order to accumulate more stablecoin reserves. In addition, the proposal requested that the DAO not sell any of its own LDO governance tokens, as doing so would result in unneeded market pressure.
It is currently unclear whether or not this idea will be put up for a vote on the chain or whether or not it will be adopted in the end. However, it does reflect Lido’s readiness to lower ETH exposure and play it safe in the event of a prolonged bear market. However, it is already too late; the price of ETH has decreased by 48% this year alone.
