DEFI

LDO surges 227% in two weeks, Lido DAO update on "selling in a bear market": selling 10 million tokens to venture capitalists first

share
LDO surges 227% in two weeks, Lido DAO update on "selling in a bear market": selling 10 million tokens to venture capitalists first

The governance token of the staking protocol Lido Finance, Lido DAO (LDO), has seen a significant surge starting from 7/13, reaching 2.065 by the time of writing on 7/28 (from 0.63), marking a 227% increase in two weeks. This protocol, which provides staking services for ETH 2.0 (PoS Ethereum), has a massive staking volume of $6.9 billion in Ethereum on the Ethereum network, with 89,961 addresses participating, totaling up to 4.26 million ETH. Users can enjoy a 3.9% annualized reward.

Lido DAO Sells Tokens to Ensure Long-Term Operations

The Head of Business at Lido Finance, Jacob Blish, proposed on 7/19 a Treasury Diversification plan. He suggested that in order to secure the operational needs of Lido Finance for the next two years, 20 million LDO tokens owned by Lido DAO should be sold at a price 50% above the 7-day TWAP (Time-Weighted Average Price) and exchanged for the stablecoin DAI. The calculated price at the time of the proposal was $1.452153.

The initial proposal mentioned that 10 million LDO tokens would be sold to the venture capital firm Dragonfly, which would provide professional support to Lido Finance. The remaining 10 million LDO tokens would be allocated to other strategic investors.

  • The tokens will not be locked
  • Full voting rights will be retained even after the sale

In the latest proposal update on 7/27, the plan has been revised:

  • Only 10 million LDO tokens will be sold to the venture capital firm Dragonfly, while the other half will be put on hold
  • The actual acquisition price will be either the initial proposal price of $1.45 or a 5% premium above the 7-day retrospective TWAP after the vote, whichever is higher
  • If LDO exceeds $2.25 during the voting period, Dragonfly has the right to withdraw its commitment
  • Importantly, there will be a one-year lock-up period for LDO

Voting will begin at 10 PM UTC on 7/28, which is 6 AM on 7/29 in Taiwan time.

In response to concerns that Dragonfly may acquire LDO at a lower price than the current market value due to the time-weighted pricing, Dragonfly stated that they have no malicious intent and are a regulated company. They are simply looking to purchase LDO and establish a partnership with Lido Finance.