Thread by @frontrunjohn

💀 #Ethereum's LARGEST liquid staking protocol Lido is burning cash & ripping off retail investors:

- Lido posted -($100m) of net earnings in `22
- Its treasury dropped 70%
- $ldo is 100% presold & insider controlled
- Spent more $ on marketing than engineering

🧵 Data below.

/1
#Lido is the largest liquid-staking derivative (LSD) on Ethereum:

- 74% of LSD is performed on Lido
- Lido controls 30% of the total staked #ethereum market

src - newsletter.banklesshq.com/p/the-future-o… @BanklessHQ

/2
Yet its governance token $ldo is economically irrelevant and worthless.

-src lido.fi/static/Lido:Et…

/3
LDO is just another utility token that grants its holders:

-Governance rights in the DAO
-Fee parameters and distribution oversight
-Oversight of node operators

/4
How much revenue collected from Lido’s staking infrastructure accrues to its LDO token holders?

The answer is zero. Not a single penny of protocol revenue or staking fees goes to LDO holders.

/5
Moreover, the $LDO token is pre-mined & pre-sold: Lido’s founding members and early investors control 64% of the LDO supply...

/6
..and the remaining 36%? Controlled by its DAO. 🙄 Starting to see a trend?

/7
The early investors and employees of Lido who hold the LDO token were subject to a 12-month holding period plus a 12-month vesting schedule

/8
The aforementioned 24-month holding period has passed, and investors plus early employees are free to dump their LDO to unsuspecting retail bag holders…

src - token.unlocks.app/lido-dao @Token_Unlocks

/9
...but can you blame them? Early investors are gonna do what early investors do: shill worthless crypto they bought for fractions of a penny onto unsuspecting retail bag holders. LDO's upside for early investors is 100x

src - unlockscalendar.com @UnlocksCalendar

/10
But it gets worse, the LDO token is the main “asset” in Lido DAO’s treasury, accounting for 75% of its total value. Moreover, the treasury controls ~20% of the total circulating supply.

src - tokenterminal.com/terminal/proje… @tokenterminal

/11
All of this leads us back to our original theme: Lido is perma-unprofitable. In the last 4 quarters:

-Lido paid out ~$280 million in staked fees
-Lido posted a net profit of -(~$100m)
-Lido’s treasury decreased by 70% from $679m to $170m ☢️

src -

https://twitter.com/tokenterminal/status/1607479144904024067?s=20&t=MViiTtm8zBYULXGFbcCizg

/12
The same token ($ldo) that is void of protocol revenue is also the "asset" that accounts for 75% of the DAO’s treasury...which has also decreased by 70% over the past 12 months! 🪦

/13
Moreover, what is lido spending $24 million/year on? Answer: a lot of non-engineering stuff. Lido’s biggest expense is marketing & business development.

/14
Lido spends more on marketing ($3m) than it does on protocol engineering, node operations, and bug bounties combined ($2.8m).

src - research.lido.fi/t/lido-dao-cor…

/15
Crypto natives usually hand wave away this poor performance with lines like:

“Crypto is a new paradigm that operates under a different set of economic incentives” 🤦
OR
“It’s totally normal for a DAO to have 80% of its treasury in its utility token”🙈

/16
This line of thinking is flawed and will lead you to poverty.

Digital assets with no “economic benefit” accruing to its token-holders will go to zero every single time.

/17
In crypto land, “economic benefit” means:

1. (Revenue collected by the protocol ) > (token subsidies + operational expenses)
and/or
2 (Token burn) > (token subsidies)

/18 Conclusion

Tokens that violate these two principles will always goto zero.

$ldo is not worth $1b.

Yes, speculation and greed-induced short-term bull runs may appear along the path to zero, but when it ends there is always a bag holder who loses.

Will it be you? 🪦

/19 End
Don't think so? Neither did the Lido DAO members who have since had change of heart:

"The LDO token is the governance token with no real value for 99% of the token holders"

src - research.lido.fi/t/its-the-toke…