Lido Finance proposal wants Lido DAO to sell 2% of all LDO tokens

Quick Take

  • Lido Finance has proposed to the Lido DAO that it sells 20 million LDO tokens to cover the company’s operational expenses for two years.
  • Dragonfly Capital is expected to buy 10 million LDO tokens during the proposed token sale.

Lido Finance has started discussions on a governance proposal to sell 20 million Lido DAO (LDO) tokens and diversify its treasury into stablecoins to pay for its operational needs. 

The proposal was submitted by Jacob Blish, head of business development at Lido Finance, on Monday. Per the proposal, the DAO should sell 20 million LDO tokens, or 2% of the total LDO token supply, to private investors. This, according to Blish, will secure about two years of operating runway for the Lido DAO. 

The Lido DAO currently holds $230 million in total within its treasury. This includes 157 million Lido DAO (LDO) tokens ($241 million), 20,940 ETH ($32 million) and 4930 staked ETH ($7 million). The DAO only owns about $366 in stablecoins.

As per the terms of the proposed token sale, venture firm Dragonfly Capital will be the lead investor. Dragonfly will buy half of the tokens — some 10 million — whereas the remaining 10 million of LDO will be acquired by “other strategic participants,” which the proposal did not name.

“We believe Dragonfly and other strategic partners will be valuable to the future decentralization and growth of Lido’s ecosystem,” the proposal read.

It's not clear yet whether this proposal will be put to an on-chain vote or whether it will receive approval in the end. Last month, a Lido developer proposed selling half of Lido's ether holdings, which did not make it to an official DAO vote.

If the deal gets approved, the Lido treasury will receive $29 million in the DAI stablecoin from investors at $1.452153 per token.  This price is based on LDO token's most recent 7-day TWAP (time weighted average price) and additional 50% premium on the TWAP.

Lido Finance is one of the largest liquid staking providers for proof-of-stake blockchains, including Ethereum's Beacon Chain, Solana, Polkadot and Cosmos. Liquid staking unlocks the value of staked crypto via staking derivative tokens that stakers can deploy on other DeFi protocols.

Lido offers liquid synthetic tokens called stAssets, backed one-to-one with the native token of a proof-of-stake blockchain. The project is governed by Lido DAO (LDO) token holders.

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