A Lido Finance core developer submitted a proposal asking the management platform to sell 10,000 Ethereum (ETH) of treasury funds in the event of a prolonged market downturn. This amount equates to $17 million at the current price of the leading altcoin project. Here are the details…
Will Lido Finance sell altcoins? The developer known as
Kadmil recommended that the governance platform known as Lido DAO (LDO) diversify about half of its ETH with stablecoins to pay for Lido’s operations over the next two years. “We are proposing to sell 10,000 ETH treasury funds to DAI. “This should cover about two years for the protocol maintenance budget for the 50-person crew and operational expenses.” Kadmil expressed his concerns that if the price of ETH falls against the US dollar in the future, the DAO will have far less resources for operational overheads and DAO contributors reimbursement. As previously reported by
Kriptokoin.com, Lido Finance is a liquid staking protocol that allows users to unlock the value of their staked tokens for capital efficiency. It is currently the leading liquid staking protocol on Ethereum. Lido DAO currently holds a total of $230 million in its treasury. This includes 166 million Lido DAO (LDO) tokens ($183 million), 20,940 ETH ($39 million) and 3836 staked ETH ($7 million).
Developer trying to hedge bear market
According to Kadmil, Lido pays its operational expenses with stablecoins such as USDC which are pegged 1:1 to the US dollar, while LDO tokens only support liquidity providers and referral bonuses. used to reward. Therefore, the proposal focused on selling only half of the unstacked Ethereum assets to build up stablecoin reserves. At the same time, the proposal asked the DAO not to sell any of its LDO governance tokens, as this would create “unnecessary price pressure” on the price.
It is not yet clear whether this proposal will be put in a chain vote or if it will eventually be approved. This then demonstrates Lido’s willingness to reduce exposure to ETH and play it safe in the event of a prolonged bear market. However, the Ethereum price has already dropped over 40 percent year-on-year. Ethereum, the second largest cryptocurrency by market capitalization, is trading at $1,771 with a 6.9% depreciation. ETH has lost 11.3 percent over the past 7 days, while it has dropped 10.3 percent in the last 14 days. Meanwhile, Lido DAO’s LDO token is changing hands at $1.02, down 7.3 percent at the time of writing.
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