Introduction
Lido DAO (LDO), the governance token of staking protocol Lido Finance, has experienced a remarkable 227% price surge over the past two weeks (July 13–28). This Ethereum-based protocol, which facilitates ETH 2.0 staking, currently manages:
- $6.9B in total value locked (TVL)
- 89,961 participating addresses
- 4.26M ETH staked
- 3.9% annualized rewards for users
Recent Developments Driving LDO's Rally
- Ethereum Merge Anticipation: The upcoming September transition to Proof-of-Stake (PoS) has renewed interest in staking services.
- Governance Proposal Impact: A critical treasury diversification proposal may have contributed to the price movement.
👉 How Ethereum's Merge impacts staking rewards
Lido DAO's Treasury Diversification Proposal
Initial Plan (July 19)
- Objective: Secure 2 years of operational runway
Mechanism: Sell 20M LDO for DAI at:
- 7-day TWAP + 50% premium
- Calculated price: $1.452153
Allocation:
- 10M LDO to Dragonfly Capital
- 10M LDO to other strategic investors
Terms:
- No lock-up period
- Full voting rights upon sale completion
Revised Plan (July 27)
| Change | Details |
|---|---|
| Reduced Scale | Only 10M LDO to Dragonfly (remaining 10M postponed) |
| Price Determination | Higher of: $1.45 OR 7-day TWAP + 5% premium post-vote |
| Exit Clause | Dragonfly may withdraw if LDO exceeds $2.25 during voting period |
| New Lock-up | 1-year vesting period implemented |
👉 Understanding DAO treasury management strategies
Community Concerns and Responses
Potential Issue: Dragonfly might acquire LDO below current market prices due to TWAP calculation.
Dragonfly's Rebuttal:
- Operates as a regulated entity
- Seeks long-term partnership with Lido
- Purchase intended to support ecosystem growth
Voting Timeline
- Start: July 28, 22:00 UTC (July 29, 06:00 Taiwan Time)
Key Factors:
- Price volatility during voting window
- Final determination of sale terms
FAQ Section
Q: Why is Lido selling tokens during a price surge?
A: The DAO aims to diversify its treasury with stablecoins to ensure operational sustainability through market cycles.
Q: What happens if the vote fails?
A: The original 20M LDO sale plan would be abandoned, potentially requiring alternative funding strategies.
Q: How does this affect existing LDO holders?
A: Dilution is minimized by:
- The relatively small sale (10M LDO ≈ 1% of circulating supply)
- Strategic partner selection
- New lock-up provisions
Q: When will these tokens enter circulation?
A: Any sold tokens will be subject to a 1-year lock-up period post-vote approval.
Market Outlook
While the proposal provides short-term certainty for Lido's operations, market participants should monitor:
- ETH staking demand post-Merge
- Treasury management efficiency
- Potential secondary effects on LDO liquidity