The Lido community recently proposed a new proposal on the governance forum, which plans to introduce an LDO staking module and a token repurchase plan, aiming to improve the utility and value capture capabilities of LIDO tokens. This proposal has attracted widespread attention both inside and outside the community as it relates to how to effectively distribute protocol revenue, and is undoubtedly a major piece of good news for LDO token holders.
Overview of proposal content
According to the proposal, Lido plans to distribute 20 to 50% of future Lido DAO revenue (the specific proportion will be determined by governance) to LDO pledgers every week in the form of repurchases and profit sharing. This means that LDO holders can obtain part of Lido DAO’s income by staking LDO, thus improving the utility and value capture capabilities of LDO tokens.
Specific implementation plan: The proposal states that the operating cost of the DAO is estimated to be approximately US$16 million per year, and based on the depth of Lido DAO’s current treasury, it is currently estimated to be sufficient for 17.5 years, indicating that directing revenue to staking users has a significant impact on operations. Small or even none.
As the largest liquidity staking protocol in the Ethereum ecosystem, Lido generates astonishing protocol revenue, even exceeding that of BNB Chain, Polygon and other networks. Therefore, introducing a profit-sharing model for LDO tokens is definitely what token holders want most. Seen.
Financial situation and challenges
Treasury blind spot: Steakhouse Financial, the financial team of Lido DAO, left a message under the proposal stating that it is not practical to include the $280 million LDO held in the treasury in the budget for future team operations. The assets currently held in the treasury are 20k ETH, 10.7k stETH, 10.3 million DAI and 2.3 million USDT, with a total value of approximately US$68 million. The approved budget expenditures by the end of the year have reached US$24 million, most of which are used for Review further development of Lido v2, including Staking Router and Dual Governance.
Actual expenditure costs: Actual expenditure costs are not as low as the proposers claim. Steakhouse Financial did not completely reject the proposal. At the end of the message, it wrote: "Looking forward to a fruitful discussion on this interesting proposal. We will also consider it and provide our opinions."
Community reaction and potential risks
Although introducing a profit-sharing or repurchase model into the protocol will help the token's value narrative, no matter which protocol's governance forum you go to, you will see that many people are disgusted with such practices. In addition to potential regulatory risks, more people believe that money should be spent wisely. Rushing to distribute profits when the protocol is still in the early expansion stage will affect the future operations of the protocol.
The potential advantages of the proposal increase the utility of the token: Obtaining a portion of Lido DAO's income by staking LDO will not only improve the utility of the LDO token, but also attract more investors to participate, thereby promoting the health of the Lido ecosystem develop.
Increase token value: Buyback and profit sharing plans can effectively increase the market demand for LDO tokens, thus driving up the token price. This is undoubtedly a major piece of good news for existing token holders.
Improve protocol governance: By introducing profit sharing and buyback plans, Lido DAO can better incentivize token holders to participate in the governance of the protocol, thereby improving the operational efficiency of the entire ecosystem.
in conclusion
This new proposal put forward by the Lido community is undoubtedly a potential project that is expected to improve the utility and value capture capabilities of LDO tokens. However, this proposal also faces some challenges, including the authenticity of financial status and potential regulatory risks. How these challenges are balanced against potential advantages in future discussions will determine whether this proposal is ultimately adopted and implemented.
In short, this proposal provides a new idea for the Lido community and deserves our close attention and discussion. Hopefully, in future discussions, an optimal solution can be found to make the Lido ecosystem healthier and more prosperous.