Lido Finance is a decentralised liquid staking protocol that assists users to earn rewards from staking their Ethereum while also maintaining liquidity through a token, stETH. Through a robust infrastructure, regular security audits, and a DAO governance model, Lido DAO puts security of staked assets first and democratises decision-making within its ecosystem.
- Bootstrapping a vibrant and sustainable LST ecosystem on Mantle L2
- Bringing blue chip DeFi protocols to Mantle L2
- Allocate 40,000 ETH from the BitDAO treasury to stETH
- Use the allocated stETH to bootstrap DEX liquidity and integrations across Mantle
- Establish a first-of-its-kind revenue-sharing agreement between BitDAO and Lido DAO for the duration of 12 months
- Include Mantle in Lido’s bridging plans to enable seamless stETH bridging to Mantle
- Collaborate on a gasless bridge for Mantle users powered by stETH
The usual staking reward setup within Lido is:
Node Operators: 5%
Lido DAO Treasury: 5%
This first-of-its-kind for Lido revenue sharing agreement would return a percentage of revenue earned by Lido DAO Treasury to BitDAO 12 months after the arrangement comes into effect.
The revenue sharing agreement would last 12 months with a possibility to extend subject to a DAO vote.
The exact terms of the revenue share should be in line with the recent proposal on Lido DAO forum (and are also subject to this proposal passing the Lido DAO vote): Tiered Rewards Share Program: A Sustainable Approach to stETH Growth - Business Development - Lido Governance
However, should Mantle seek terms that deviate from this proposal (for eg higher % of rev share given size allocated to stETH), a separate vote within Lido DAO shall be arranged. The Mantle ecosystem would have to reason that the integration with Lido can create disproportionate benefits for Lido DAO. (It is my personal opinion that it could be the case due to the vibrant ecosystem and Bybit CEX userbase, but that’s ultimately up to the DAO)
The allocated stETH should be used to bootstrap liquidity across DEXes like Uniswap, Curve and native AMMs.
While that is ultimately up to the BitDAO community, this proposal recommends allocating DAO-owned stETH/ETH liquidity into prominent DEXes on Mantle. Sufficient trading activity and TVL is likely to convince prominent lending protocols like Aave to deploy on Mantle and set a substantial supply cap and LTV on wstETH. This would in turn create sticky trading flows as users loop staking rewards.
Smart Contract Risk
Lido Finance’s stETH represents a liquid tokenized claim on staked Ethereum. The underlying smart contracts powering this functionality have undergone thorough audits by highly reputed firms. These assessments concluded the contracts’ robustness and solidity.
The utility of stETH is substantial due to its widespread integration across the DeFi space. StETH provides holders with the ability to earn staking rewards while also participating in other DeFi activities, such as yield farming or providing liquidity, thereby enhancing its utility. Its integrations with popular DeFi protocols like Curve, 1inch, and Aave further validate stETH’s broad acceptability and usage within the DeFi ecosystem.
The liquidity of stETH is another crucial factor contributing to its position as a market leader. With billions of USD worth of stETH LP’ed across multiple DEXes and ecosystem, the existence of robust pricing feeds, the risk of insufficient liquidity is greatly reduced.
Apart from clear commercial use cases, this proposal is testament to Mantle’s high potential as a Layer 2 within the DeFi ecosystem and as a Tier 1 partner for Lido DAO. I believe this proposal would set the stage for a wider integration endeavour between the two DAOs and greatly increase Mantle’s attractiveness for DeFi’s user base.