Authorize a Contingent LDO CEX Liquidity Market-Making Mandate

Summary

This proposal requests Lido DAO to authorize a contingent, capped market-making mandate for LDO on centralized exchanges (CEXs), to reduce the risk of LDO trading-pair degradation or delisting due to insufficient liquidity.

The authorization covers two funding caps from the Lido DAO Treasury, in addition to the approved EGG budget (EGG-2026).

• Up to the lower of $1,500,000 in LDO equivalent or 7,500,000 LDO, as a recallable facility for market-making inventory.
• Up to 480,000 USDC for fixed market-maker retainers and directly related costs; to be disbursed at the start of each quarter via Easy Track.

No funds may be drawn unless the Lido Growth Committee determines that LDO liquidity on certain centralized exchanges is insufficient, or likely to become insufficient. The Lido Growth Committee shall have discretion to determine the materiality of any particular centralized exchange and whether this mechanism should be activated in respect of that exchange. If activated in any instance, the mandate may operate for up to 12 months from the activation date. If the mandate is not activated within two years from the date of this vote, the authorization expires.

Motivation

The Lido Ecosystem Foundation does not currently engage any market makers for LDO pairs. However, declining trading volume increases the risk that market makers active in LDO markets withdraw liquidity or that exchanges delist pairs, often with little advance notice. To prepare for such cases, a capped, pre-approved mandate would allow contributors to respond within a defined scope if a venue begins a review, without rushing governance. The mandate is preventive: it is not a commitment to activate a market-making program immediately upon approval, but an option to activate at any time.

What this vote approves

1. A contingent LDO CEX market-making mandate for up to 12 months from activation. Continuation beyond that term requires a new DAO authorization.
2. A recallable LDO facility of up to $1,500,000 (withdrawable in LDO equivalent) from the Lido DAO Treasury, valued at the CoinGecko LDO closing price in USD on the day before the relevant Easy Track motion is initiated, and capped at 7,500,000 LDO.
3. A budget of up to 480,000 USDC from the Lido DAO Treasury for fixed market-maker retainers and directly related costs.
4. Authority for the Lido Growth Committee to decide whether the mandate is activated, as well as authority for the Liquidity Observation Lab to support execution and onward disbursement. Any market maker will contract with the Lido Ecosystem Foundation.
5. Disbursement of both amounts through Easy Track transfer motions to the Liquidity Observation Lab multisig on Ethereum mainnet, using the existing Easy Track setup for USDC transfers, and a new Easy Track instance for LDO transfers, deployed and registered through the relevant DAO on-chain vote. Any disbursement of either LDO or USDC needs to be accompanied by appropriate reporting on the Lido Research Forum by the Growth Committee outlining the amount and purpose of each payment. The relationship to this motion should be apparent from this reporting.

Both caps are in addition to the approved EGG budget. Each drawdown follows the ordinary Easy Track process, including the objection period, any applicable per-motion or per-period limit, and requires the Growth Committee's activation determination as a prerequisite.

This proposal does not approve any specific market maker, exchange, call option, warrant, token purchase right, price-support activity, or use of mandate LDO for governance voting.

Structure and restrictions

If activated, a recallable LDO facility is made available from the Lido DAO Treasury to the Lido Ecosystem Foundation, which makes a back-to-back recallable facility available to the selected market maker, with the LDO disbursed operationally via the Liquidity Observation Lab. Where feasible, assets would be held in a Foundation-owned CEX account with the market maker limited to trading permissions and no withdrawal rights.

Any final agreement with a market maker should require that:

• LDO provided under the facility is not used for governance voting.
• Activity is limited to two-sided liquidity provision and related inventory management, not price support.
• Lending, pledging, rehypothecation and use in exchange yield or margin-lending products are prohibited (unless the Growth Committee determines that the adverse impact on mandate pricing is too large).
• Manipulative trading, wash trading, spoofing, and abusive practices are prohibited.
• Withdrawal permissions are disabled or tightly controlled where Foundation-owned CEX accounts are used.
• Market-maker uptime is at least 95% and KPIs should include market maker best bid / best ask spread, liquidity depth within that spread and at +/- 50, +/- 100 and +/- 200 bps.
• Contracts between the Lido Ecosystem Foundation and market makers shall include reporting, recall, as well as a right to terminate the agreement upon 30 days’ notice.
• No call options or similar upside instruments are granted without separate DAO approval.
• The agreement ceases upon delisting of the relevant pair, with no further costs incurred from that point.

Unused LDO or USDC should remain with, or be returned to, the DAO Treasury address no later than 30 calendar days from the time of disbursement.

DAO Oversight and Reporting

A Snapshot vote may end this authorization at any time, subject to any remaining terms of external agreements concluded with market makers under this mandate. Any change to scope or budget, or deviation from the approved caps or purpose, requires separate DAO approval. Material defaults, losses, recalls, terminations, or deviations from the approved mandate should be disclosed promptly where legally and operationally permissible. Lido DAO bears all financial and credit risk associated with the program.

If the mandate is activated, the Lido Growth Committee should maintain reporting on the Lido Research forum, including:

1. An activation notice confirming that the required determination has been made.
2. A high-level summary of the market-maker engagement, to the extent contractually permissible, including intended Easy Track drawdowns, LDO amount, expected monthly retainer, venue and pair scope where disclosable, and whether Foundation-owned CEX accounts are used.
3. Quarterly updates covering USDC spend, outstanding LDO, and high-level performance, including market-maker uptime and the share of time agreed liquidity-depth KPIs are met at 50, 100, and 200 basis points from the mid-price on a per-venue basis.
4. A completion report within two weeks after the program ends, covering LDO returned, USDC spent, and any residual assets.

Next steps

If the vote concludes positively:

• The authorization takes effect from the date of the vote conclusion and expires two years from that date if not activated earlier.
• A new Easy Track instance for LDO transfers to the Liquidity Observation Lab will be deployed in one of the upcoming DAO on-chain votes. USDC transfers will use the existing Easy Track setup.
• If the Growth Committee activates the mandate, it will publish an activation notice on the forum, and reporting will follow the schedule above.