Lido Finance Files Another Proposal to Sell Treasury Tokens to Dragonfly Capital

Lido DAO (LDO), the governance forum for the Lido Finance project, will once again vote on another proposal to sell LDO tokens to venture capital firm Dragonfly Capital. This new proposal comes after the community railed against the previous proposal to sell tokens to the VC firm without any vesting period for the coins.

Lido DAO Treasury Diversification: Take Two

Jacob Blish, head of business development and Lido Finance, submitted the new proposal on July 27. Blish also authored the previous proposal that was put to a vote earlier in the month but was refused by the community.

This new proposal also calls for selling 10 million LDO tokens to the VC firm. It is half of the full treasury diversification plan that will see Lido sell 20 million LDO tokens from its treasury reserves for the DAI stablecoin.

Blish made some adjustments to the planned token sale. The first change is the addition of a one-year vesting requirement for Dragonfly. The absence of a lock-up period for the tokens was a cause for contention within the Lido DAO during the vote on the previous proposal.

The re-worked proposal also has a new pricing model for the token sale. Instead of a set price of $1.45, the sale will have two possible price benchmarks: one is the same flat rate as the previous proposal while the other is an average LDO price for the seven days preceding the vote on the matter. 

Dragonfly will acquire the tokens using the higher of the two prices unless it is more than $2.25, at which point the VC firm can exit the deal. This provision for a higher price benchmark also serves to satisfy calls within the DAO for the token sale to happen at a higher premium.

Voting on the new proposal will commence on July 27. Discussions on the Lido forum are already showing support for the re-worked plan, a marked difference from what occurred during the previous vote.

Dragonfly Clears the Air

Dragonfly also revealed that it was the entity behind the wallet address that supported the first vote with 15 million LDO tokens. Dragonfly partner Tom Schmidt took to the Lido forum to express that the company did not have any malicious intent in backing the vote to sell tokens to the VC firm.

According to Schmidt, Dragonfly is aware of the DAO’s concerns and has taken steps in conjunction with Lido Finance to address these matters. Schmidt also clarified that Dragonfly Ventures will be the arm of the VC firm that will acquire the tokens. Dragonfly Liquid was the originally designated arm of the VC outfit to buy the coins in the previous arrangement.

With the vote set to commence, Lido is among a group of DAOs looking to manage their treasuries. The move is also the latest development for the liquid staking giant that recently expanded its footprint to the Ethereum Layer 2 ecosystem.