LEGO grant to Launchnodes for Lido Impact Staking initiative

Supervised by LEGO

$300K DAI LEGO grant to Launchnodes for research and implementation of a solution for responsible staking initiative.

TL;DR

Launchnodes pioneers Impact Staking for ETH, funding projects addressing global issues. Impact Stakers pledge rewards to projects with measurable impact. Effective projects receive ongoing funding, while ineffective ones are remedied swiftly.

Lido Impact Staking Smart Contract aims to enable ETH stakers to pledge rewards to ongoing projects. Beneficiaries include UNICEF, GiveDirectly, Treedom, and others. Impact Staking via Lido is expected to attract individuals, foundations, and family offices.

All aspects of the web3 infrastructure and implementation for Impact Staking with Lido are intended to be fully transparent and visible in public repos and on the Ethereum blockchain.

Motivations

1. Strategically value of the proposal for Lido is that it can become a new distribution channel and a case study for stETH wrappers.
2. It provides a low-cost opportunity for the DAO to engage new contributors, which enhances decentralization and the growth of Lido on Ethereum.
3. The project's potential to attract interest and serve as a pilot for future initiatives is seen as a valuable positive communication opportunity for the broader ecosystem.
4. It showcases how Lido can be used as staking middleware to empower users in the web3 ecosystem and support real-world initiatives.
5. By linking staking rewards with real-world organizations, the proposal helps onboard new users to web3 and crypto who may not have been interested otherwise.

Projects to target with Lido Impact Staking:

Cause / Project	Project Delivery	KPIs / Outcome Tracked
Net Zero Ethereum	Treedom	Carbon Offset (tonnes/CO2) vs Ethereum footprint
Internet Connectivity for Schools	UNICEF Giga	Number of schools connected to the Internet
Lifting People Out of Poverty	Give Directly	Number of people lifted out of poverty

These 3 projects have huge global potential to improve lives, and to reduce the carbon footprint of the Ethereum network.

Scope of Work

Before the project proceeds, Launchnodes will engage with an international tax specialist to ensure it operates in a tax-efficient manner. They will also confirm that the KYC/KYB and AML requirements are met for partner organizations. A highly visual website and dashboard will be created to display real-time information on ETH staked, donations, and impact. The three core aspects of the project are:

• the Lido Impact Staking Smart Contract
• Impact Staking User Interface to Pledge Returns and View Impact
• Project Interface and Metrics

You can read more about mentioned project parts in the proposal.

The grant will fund all three components, but the final security and smart contract review will be funded by Launchnodes or its ecosystem partners.

Risk: Response & Mitigation

1: Causes may not suit crypto natives.

• 3 high profile global issues have been selected with large, trusted partners.
• The architecture and model will be developed for multiple different causes to be represented and achieve donations.
• Alternatives will continue to be added if initial causes don't resonate.
• Feedback, proposals, and partnerships will be sought from potential stakers.

2: The initiative will fail due to insufficient/ineffective marketing.

• The 3 initial causes chosen have global marketing capabilities.
• The memetic website should be highly visually appealing and have elements to increase global visibility and reach.
• Launchnodes has established an Impact Staking working group and plans to actively spend additional marketing funds.

3: The approach and mechanics do not meet the needs of donors/philanthropists.

• The advantageous tax treatment of impact staking rewards donated to a good cause will be investigated and confirmed.
• Additional projects/causes with greater appeal will be sought if necessary.

4: The Lido Impact Staking initiative falters after an initially successful project.

• The project has been designed to be self-sustaining for the long-term, after successful go-live.

Grant Request

Breakdown Timeline for each of the following components:

1. Understanding Tax, KYC, AML Requirements - 4 weeks
2. Lido Impact Staking Smart Contract - 12 weeks
3. Impact Staking - User Interface to Pledge Returns - 4 weeks
4. Impact Staking - Project Interface and Metrics - 6 weeks
5. Security Review - Full External Security Review of Smart Contract and Systems (to be executed in coordination with the Lido Audits Committee)

Total Project Duration: 6 months (Development) + 1 month (External Security Review)

(2 Smart Contract Engineers, 1 Front End Engineer, 1 Back End Engineer, 1 Test Engineer, 1 External Security Audit Team)

Access

Access and ongoing support relating to all features outlined in the Scope of Work proposed above is planned for at least 12 months after completion of the full scope of the proposal.

It is intended that the platform and Impact Staking as an initiative will grow at pace throughout 2023 and beyond, and that the project components will continue to be built upon, supported and maintained - either by Launchnodes directly, or through a community approach with a dedicated DAO or similar structure.

Grants and Payment

For the Scope of Work proposed above, Launchnodes is requesting a $300,000 grant with the following structure for execution:

• Agreement to proceed, contingent upon tax benefits of charitable giving applying to Impact Staking
• Tax law opinion received (US jurisdiction) on whether there is parity between direct charitable giving, and donation of impact staking rewards - Launchnodes to fund
• 25% upon project initiation
• 15% upon successful external security review and satisfactory resolution of Medium, High, and Critical-level issues highlighted - the external security audit team will be engaged in coordination with the Lido Audits Committee
• 60% after the first $3m has generated in funding for Impact Staking projects across all Lido Impact Staking vaults

This model ensures that 60% of the project’s fees are contingent upon Lido Impact Staking engaging a meaningful volume of supportive Impact Stakers.

In case this proposal accepted by the Lido DAO, grants to be disbursed in DAI from LEGO committee multisig upon completion of above mentioned milestones. For that purpose LEGO multisig is to be funded via Easy Track motions.

Ongoing Maintenance, Support and Growth

Launchnodes can support the Lido Impact Staking platform by becoming a node operator, which would provide a revenue stream for the platform's maintenance and expansion. Launchnodes could also operate nodes for organizations like Save the Children or UNICEF enabling them to receive funds for upkeep. Alternatively, Launchnodes could charge a small percentage of rewards or total staked amount to remain sustainable long-term.

Initial Impact Projects and Causes

All projects will be required to provide ongoing data on all of the Key Performance Indicators being tracked as part of their project delivery, eg. tonnes of CO2 offset. This will drive the real-time data on the Lido Impact Staking dashboards. More details about initial Projects and Causes.