Lido Community Created New Proposal To Redirect 25% Of Revenue To LDO Stakers

Key Points:

• A member of the Lido community developed a governance plan to improve the usefulness of Lido’s LDO.
• The concept includes a Lido DAO insurance fund.
• It also suggests a revenue-sharing setting that would transfer 20-50% of future Lido DAO funds from the protocol treasury to LDO stakeholders.

The Lido community has recently added a new modification request after upgrading to V2. This proposal addresses the project’s financial aspects, especially income reallocation.

A Lido community member known as “lidomaxi” presented a governance proposal on Wednesday to boost the usefulness of its native governance token LDO by implementing staking and a token buyback scheme.

The proposal contains a Lido DAO insurance fund and a revenue-sharing feature that will transfer 20-50% of future DAO earnings from the protocol treasury to LDO stakeholders.

All reward tokens will be vested and progressively unlocked over the course of six months. Token redemption will be based on VWAP and TWAMM price averaging, with a 14-day wait in withdrawing tokens from staking.

According to data analytics companies Nansen and Arkham Intelligence, the suggestion came before Jump Trading moved over 3 million LDO tokens worth $7.5 million to a different address in two transactions.

DeFiLlama statistics show at the time of writing, Lido’s Treasury reserves varied by about $320.3 million, with LDO accounting for around 79%.

The problem of keeping a discrepancy insurance fund is another essential feature of this approach. In particular, if the quantity of stETH in the insurance fund goes below the required level (because of the need to compensate for slashing), some of the income for LDO stakeholders will be reallocated back to this insurance fund in order to keep the number of assets above the minimum threshold.

Lido faced a couple of cutting incidents after the Shanghai deployment. As a result, this scenario is also described in the proposal with great attention. In particular, if slashing happens, the following monies are used to pay for damage:

• The insurance fund. When the insurance fund is exhausted, the money will be drawn from other pools.
• The user’s reward for staking LDO tokens (up to 30% of the tokens slashed).
• The last step is to minimize the yield of stETH users.

This idea is still in the 7-day discussion period and has not yet been voted on. Some people in the community have already expressed their support for the initiative.

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