The decentralized autonomous organization (DAO) behind Lido, the largest ethereum stake pool, is considering whether to sell or invest $30 million worth of ether (ETH) from its treasury.
The DAO’s financial arm, Steakhouse Financial, submitted a proposal on Feb. 14 examining four options, one of which envisions staking some or all of its ETH on Lido as Lido Staked ETH (stETH).
Another option for LidoDAO is to sell some or all of its 20,304 ETH in exchange for a stablecoin, with the goal of broadening the DAO’s runway.
Lido DAO Considers Selling or Staking 20,304 ETH Worth $30M @azcoinnews $LDO $ ether https://t.co/mn6VgpW6RP
— AZCoin News (@azcoinnews) February 15, 2023
According to the Ethereum Foundation, the proposal comes as Ethereum’s Shanghai and Capella upgrades will soon enable the withdrawal of staked ETH, which are expected to take place in the first half of 2023.
While converting ETH to staked ETH could lead to more protocol rewards, the DAO warned that too much staking could risk not having enough ether on hand “when needed.”
Assets are currently held in LidoDAO’s vaults, with ETH currently accounting for approximately 9% of the over $350 million. Source: Lido.
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In terms of operating costs, Steakhouse Financial suggested that it may be necessary to swap ether for stablecoins to “secure additional runway.”
Steakhouse Financial pointed out that LidoDAO currently has an inflow of about 1,000 stETH per month, DAO’s monthly income is about 1.3 million to 1.5 million US dollars, and ETH prices have fluctuated between US$1,100 and US$1,700 in the past few months.
Monthly stETH traffic on Lido has been steadily increasing since January 2021. Source: Dune Analytics
Steakhouse Financial said the figures were “sufficient to cover monthly operating costs”.
However, they are still weighing whether to convert excess stETH into stablecoins to better respond to changes in market conditions that may increase operating costs.
LidoDAO’s business development representatives noted that they are not particularly excited about the current state of the stablecoin market:
“Given all the FUD and rumours, DAI with USDC collateral and USDC itself are potentially risky if frozen. This means I have questions about LUSD’s liquidity, and USDT has its own issues.”
It appears that most LidoDAO members are in favor of the partial sale, holding a portion of the 20,304 ETH locked in their Aragon smart contracts.
The proposals come as the total value locked (TVL) in stETH fell by 6.66% between February 6 and 13.
📈 Lido Analytics: February 6-13, 2023
TLDR:
– Lido TVL fell -6.66%, following a -7.22% drop in ETH price.
– Lido led the new stake in Ethereum with a 27% weekly deposit share.
– new @AaveAave V3 wstETH: 34.726 (+34.87%).
– Lido on Polygon achieves 2% market share. pic.twitter.com/iWA9YccM6e– Lido (@LidoFinance) February 13, 2023
According to DeFiLlama, Lido’s TVL is currently $8.13 billion.
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