Lido DAO
The Lido DAO governs Lido’s liquid staking protocols.
Lido is a liquid staking solution for Etheruem and other proof of stake chains. This allows users to stake their tokens without having to lock assets or maintain staking infrastructure. Users who stake via Lido receive daily rewards in the form of staking derivative tokens which are pegged 1:1 to the underlying staked assets.
Overview
History
History Lido launched in December 2020 a few weeks after the Ethereum 2.0 Beacon Chain went live. There are some challenges with staking on the Ethereum blockchain. Users can only stake multiples of 32 ETH. There are also operational barriers, with the need for technical expertise in order to stake. Moreover, the staked ETH are locked with the initial phase of ETH 2.0, and cannot be used in other protocols.
Lido aims to solve these issues by offering non-custodial staking services. This differs from staking services offered by exchanges. The capital inefficiency problem is solved by the issuance of stETH, the tokenized version of staked ETH. With this token users can still use the staked capital in other protocols.
Lido’s focus has been on Ethereum, but it is expanding to other blockchains. Lido launched staking on Terra in March 2021, and staking on Solana in September 2021. Similar to Ethereum, stakers of Terra’s native LUNA asset or Solana’s SOL asset receive a derivative token (bLUNA or stSOL).
LDO Token
The LDO token grants governance rights in the Lido DAO. Voting weight is proportional to the amount of LDO tokens a voter stakes in the voting contract. The Lido DAO executes upgrades and decides on parameters such as appointing and removing node operators, the fee structure and selecting oracles.
Users receive a tokenized version of their staked assets. When staking on the Ethereum blockchain via Lido, users receive stETH in return (bLuna for staking on the Terra blockchain, and stSOL for staking on the Solana blockchain). These tokenized assets can be used in other decentralized protocols (e.g. lending).
Launch & Initial Token Distribution
Upon launch in December 2020 1 billion LDO tokens were minted. The token allocation was as follows:
- DAO Treasury: 36.32%
- Investors: 22.18%
- Initial developers: 20%
- Founders and future employees: 15%
- Validators and withdrawal key signers: 6.5%
With the exception of the DAO Treasury, the tokens have a one-year lock up which is followed by a one-year vesting period
Governance
Users can submit proposals for discussion to the governance platform for the Lido DAO, including Lido Improvement Proposals (LIPs) for core protocol updates: https://research.lido.fi/. A proposal must meet documentation and format requirements before submission and will be manually reviewed by an editor. The community then has the chance to discuss the LIP on https://research.lido.fi/. Once deemed sufficiently mature, the proposal will be added to a governance call where it can be discussed for inclusion in a future platform upgrade.
Lido also uses a Snapshot forum for off-chain voting which is intended as a signalling platform to determine proposal sentiment prior to launching on-chain votes https://snapshot.org/#/lido-snapshot.eth
On-Chain Governance Details
[Decisions in the Lido DAO are made by voting. Amongst others, DAO members manage protocol parameters, lists of node operators and oracle members, and can vote on app upgrades. The voting power of each member is proportional to the share of Lido DAO tokens they hold. In addition to a 50% approval, a minimum approval of 5% of the total token supply is required for an approval to pass. Any DAO member can make a proposal for the DAO to vote on.
Lido uses Aragon for on-chain voting where members can submit proposals.
Join our DAO
Please reach out via our Discord or Telegram.