Boost Utility and Sustainability: Lido Proposes Staking its LDO Token23. Mai 2023
• Lido, an Ethereum staking provider, has proposed a staking mechanism for its native LDO token to increase utility and financial sustainability.
• The proposed mechanism would allow token holders to stake LDO in exchange for a share of the protocol’s future earnings.
• The proposal also introduces a new minimum limit for Lido’s insurance fund set to 6,000 staked ETH (stETH), or around $10.9 million with today’s exchange rate.
Lido Proposes Staking Mechanism
Ethereum staking provider Lido has proposed a staking mechanism for its native LDO token in an effort to boost the utility and financial sustainability of the token. According to the proposal, posted on Lido’s governance forum on May 17, the staking program will enable token holders to stake LDO in exchange for a share – worth approximately 20-50% – of Lido’s future earnings.
Staking Rewards and Vesting Period
Staking rewards will be paid out weekly, however earned tokens are subject to a 6-month vesting period designed to better align interests with the success of the protocol. Additionally, the proposal introduces a new minimum limit for Lido’s insurance fund set to 6,000 staked ETH (stETH), or around $10.9 million with today’s exchange rate. Stakers will be collectively responsible for maintaining this level as “insurance providers of last resort“.
The proposal garnered support from community members who recognized that current and prospective token holders don’t directly benefit from revenue generated by the protocol and that $LDO has no direct utility. By introducing this proposal it aims to better align interests between stakeholders and catalyze discussion towards value accrual issues facing $LDO.
The price of $LDO rose as soon as the news was published but has since largely traded lower. From its peak of $2.56 last Wednesday it had fallen close to 20% at press time Monday ($2.06).
The proposed mechanism looks like it could potentially benefit both current and prospective token holders by increasing utility and creating more opportunities for value accrual through more sustainable means such as revenue sharing programs tied directly into the success of the protocol itself. This could result in increased adoption rates which is always positive news when it comes blockchain projects looking towards mass adoption!