Lido Considering $30 million investment in Ethereum
2023.02.15 01:44
Lido Considering $30 million investment in Ethereum
By Tiffany Smith
Budrigannews.com – The decentralized autonomous organization that runs Lido, the largest pool for staking Ethereum, is considering whether to stake the $30 million in Ether (ETH) from its treasury or sell it.
Steakhouse Financial, the DAO’s financial unit, submitted a proposal on February 14 that considers four options, one of which is staking some or all of its ETH on Lido in the form of Lido Staked ETH (stETH).
A different scenario would involve LidoDAO trading some or all of its 20,304 ETH for a stablecoin with the intention of expanding the DAO’s runway.
The Ethereum Foundation says that Ethereum’s Shanghai and Capella upgrades, which are expected to happen early this year, will soon enable ETH staking withdrawals. This is why the proposal is being made.
The DAO is wary that too much staking could put it at risk of not having enough Ether available “in case of need,” even though converting the ETH to Staked ETH could result in additional rewards from the protocol.
Steakhouse Financial stated that in order to “preemptively secure additional runway,” it may be necessary to exchange Ether for a stablecoin in regard to operating expenses.
Steakhouse Financial noted that the DAO is making approximately $1.3 million to 1.5 million per month with LidoDAO’s current inflows of approximately 1000 stETH per month, despite the price of ETH fluctuating between $1,100 and $1,700 over the course of the past few months.
The monthly inflow of stETH on Lido has steadily increased since January 2021. Source: Dune AnalyticsAccording to Steakhouse Financial, these figures should “enough to cover monthly operating expenses” on their own.
However, they are still weighing the pros and cons of converting excess stETH into a stablecoin in order to better prepare for any shifts in market conditions that could result in higher operating costs.
According to a LidoDAO representative responsible for business development, they are dissatisfied with the current state of the stablecoin marke
“Taking into account all of the untruths and rumors, both DAI as a result of USDC collateral and USDC itself could be at risk if they freeze. However, I have issues with LUSD’s liquidity, and USDT has its own issues.
The majority of LidoDAO members appear to favor selling and staking some of the 20,304 ETH that are locked in its Aragon smart contract.
The proposals come as stETH’s total value locked (TVL) decreased 6.66 percent between February 6 and February 13.
Lido Analytics:
TLDR:
– Lido TVL is down -6.66%, following a -7.22% fall in the price of ETH.
– Lido led in new stake on Ethereum, with a 27% share in weekly deposits.
– New @AaveAave V3 wstETH: 34,726 (+34.87%).
– Lido on Polygon reaches 2% market share.
On-chain metrics platform DeFiLlama says that Lido’s TVL is $8.13 billion at the moment.
