Ethereum equity provider Lido introduced its native LDO token in an effort to increase the utility and financial sustainability of the token.
According to a proposal posted on Lido’s governance forum on May 17, the staking program would allow token holders to take an estimated 20-50% share of Lido’s future earnings to replace the LDO.
The proposal was written by a member of the Lido community named Lidomaxi.
Under the proposal, stock awards would be paid out on a weekly basis, but this does not mean that recipients are free to use their awards immediately. Instead, the resulting LDO tokens will be subject to a 6-month grace period designed to better align the needs of token holders with the success of the LDO protocol.
In addition, the proposal introduces a new minimum for Lido Insurance Fund set at 6,000 stakes ETH (stETH), or about $10.9 million at today’s exchange rate.
The proposal explained that stakeholders are responsible for maintaining funds at this level, and therefore act as “insurance providers of last resort.”
Concluding the proposal, lidomaxi recognizes the growth lido has experienced as a protocol in recent years, growing “from the original DeFi protocol to a major leader in the field of liquid stats.”
“Despite the success of Lido, LDO token holders do not directly benefit from the revenue generated by the protocol and there is no direct benefit to $LDO. These points are a major concern for current and future token holders,” Lidomaxi wrote.
The idea is to “stimulate dialogue and promote LDO. It aims to provide a solution to the prevailing issues of consumption and values.”
Commenting on the idea, several members of the community seemed to support it, with one user saying, “There’s definitely a good case to be made for something like this […]”.
Another user said: “I agree that tying the success of the protocol to the LDO token is undoubtedly important. As many other protocols have shown, revenue sharing is the way to go.”
LDO prices skyrocketed when the proposal was published last Wednesday, but have been rising ever since.
From last Wednesday’s high of $2.56, LDO has fallen 20% to $2.06 on Monday.