DAO Should Sell $17 Million In ETH To ‘Prepare For Bear Market’ According To Lido Developer

In the event of a lengthy market collapse, a Lido DAO Finance core developer has proposed that its governance platform sell 10,000 ether (ETH) ($17 million) from its treasury funds.

The developer, who goes by the name kadmil, suggested that Lido DAO, the governance platform, diversify about half of its ETH into stablecoins to pay for Lido’s operations for the next two years. “We suggest selling DAI 10,000 ETH in treasury money. “This should cover around two years of protocol maintenance budget spending for a 50-person team and operations,” according to the plan.

Kadmil voiced fear that if the price of ETH plummeted against the US dollar in the future, the DAO would have considerably fewer resources for operating overhead and contributor repayment.

Lido Finance is a capital-efficient liquid staking mechanism that allows users to unlock the value of their staked tokens. On Ethereum, it is currently the most liquid staking mechanism.

The Lido DAO’s treasury now holds $230 million in total

166 million Lido DAO (LDO) tokens ($183 million), 20,940 ETH ($39 million), and 3836 staked ETH ($7 million) are among the assets.

Lido covers its operational expenditures in stablecoins like USDC, according to kadmil, while LDO tokens are only used to compensate liquidity providers and referral bonuses. As a result, the plan concentrated on selling only half of its unstaked ETH in order to increase its stablecoin reserves.

At the same time, the proposal requested that the DAO refrain from selling any of its own LDO governance tokens, citing “unnecessary pricing pressure” on the price.

It’s unclear whether this plan will be subjected to an on-chain vote or whether it will ultimately be adopted. However, it does show Lido’s desire to minimize his exposure to ETH and play it safe in the event of a prolonged down market. But it’s too late; the price of ETH has dropped by 48% this year alone.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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