Lido Finance has been working on a proposal that will enable Lido DAO to operate in stablecoins. To keep its autonomous status and self-governing module intact, the recent proposal is said to be the need of the hour for Lido and its contributors. It is indispensable at that time to ensure that Lido maintains its leading position in the Liquid Staking market. The proposal that has been devised with collective efforts from Lido Finance, Lido DAO, and the community is mandatory for the firm to manage its expenditures.
Lido DAO, its Contributors, and Provisional Budget
Work and debate on this proposal have been ongoing since the beginning of June 2022 but now it is heading towards the final stage. The Lido DAO and its Core Contributors want to diversify its treasury with stablecoins to ensure its secure working for the next couple of years. In this regard, a notice had been issued a week ago to inform its community about the proposed compensation structure and estimated operational costs of its 20 core contributors (out of 75 in total) workstreams (which will be merged to make core units that will form a unit framework).
In this regard, a vote has been called to figure out how to diversify the treasury, make a proposal and implement it. Now the community has helped in developing a holistic financial model that will be used for the next 1-2 years. The next vote will also be a Snapshot vote, similar to the one held on the 6th of June, to execute the below-given proposal.
The Proposal
To secure the operating runway for 2 years, Lido Treasury will sell 2 percent of its existing LDO tokens from the Lido DAO treasury (currently 177m LDO) at a 7-day average with a 50% premium. The estimated price for each LDO in this proposal is $1.452. Although many firms have approached Lido DAO in this regard but Dragonfly Capital investment firm seems the one that is going to work on this proposal. The reason behind giving preference to Dragonfly Capital is that it will anchor Lido’s position in the liquid staking market by additionally assisting the vertical integration of staking assets in the decentralized finance (DeFi) ecosystem.
Summary of Terms Applicable to the Proposal
- A total of 20M LDO tokens will be sold which collectively make 2% of the DAO’s holdings.
- The tokens will be sold at the purchase price which will make approximately $29 million in stablecoins ($DAI).
- Dragonfly Capital to buy 1% LDO while the other 1% will be bought by other strategic partners.
- Sold tokens will be unlocked immediately after the purchase with full voting rights.
The Reason Behind Sell-off
The reason behind this speedy and unexpected sell-off is nothing else but the current market condition. The deteriorating market condition has already forced many firms to lay off their staff. Lido Finance also wants to quickly convert this proposal into a signed deal fearing the uncertainty of the market. The voting is expected to commence in a few hours and everything will be finalized within a week.
