- If LDO tokens were staked, owners may start receiving payments from the protocol’s profits.
- The current income model for Lido is to charge a 10% fee on user rewards.
A major shift is coming to the tokenomics of liquid staking behemoth Lido Finance. Members of the community want to include a staking function into LDO, as hinted at in a recent proposal.
Users require 32 ETH, or approximately $60,000 at today’s pricing, to stake straight to the mainnet. To overcome this difficulty, liquid staking platforms like Lido have arisen, allowing users to start earning with as little as 0.1 ETH.
Many industry members will be keeping a close eye on this plan as it progresses. After all, Lido has a TVL of about $12 billion, making it the single biggest DeFi project. The proposal is in its infancy at this point. If LDO tokens were staked, their owners may start receiving payments from the protocol’s profits. The current income model for Lido is to charge a 10% fee on user rewards.
Insurance Providers of Last Resort
The DAO of the project receives half of it, while the operators of the nodes that stake on the mainnet keep the other half. If the current plan is approved, stakers will get 20% to 50% of the Lido DAO’s profits. One might get back up to 2% of the 5% service charge.
This would be done via buybacks, whereby newly issued LDO tokens would be purchased using the proceeds from the sale of existing tokens. However, this is not free cash. Investors in LDOs get an additional income at the cost of becoming the “insurance providers of last resort,” as the plan puts it.
In the case of a catastrophic incident, which might exhaust the project’s insurance fund, up to 30 percent of LDO stakers’ investments could be lost.
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