Proposal to approve Lido DAO Treasury Management Principles and authorize the formation of a Treasury Management Committee

Summary

This proposal is asking for the approval of a few key Treasury Management Principles (Principles), and the creation of a Treasury Management Committee (Committee) to put forward Treasury Management Strategies (Strategies) constrained by the Principles, and Treasury Management Actions (Actions) to execute them using On-chain tools.

Treasury Management Principles

1. ETH is Lido DAO’s primary Unit of Account, interchangeable with stETH through deposits and withdrawals using Lido protocol.
2. Lido DAO’s treasury is the source of its resilience and future growth, and can fund initiatives that further the protocol’s decentralization and network security objectives
   1. The purpose of Lido DAO’s treasury is to support the integrity, growth and robustness of the Lido protocols
   2. The treasury may also be used for funding many initiatives, including but not limited to, research, maintenance, development, education and advocacy that further the decentralization and network security objectives of the protocol
3. Risk of loss to treasury funds should be minimized at every instance
4. All treasury ETH must be staked using Lido
5. Token holders have the ultimate say
   1. Token holder decisions can amend and update the Principles, as well as override the Committee through separate on-chain votes

*(nb. 20,304 ETH at time of writing)

Treasury Management Committee

1. A Committee should be formed to maintain and execute policies
   1. Token holders authorize the formation of a Treasury Management Committee composed of members (alt. signers) around a multisig that will be allowed to submit a narrow set of possible Strategies and activate their corresponding on-chain Actions, constrained through On-chain tools
   2. The Committee multisig will strictly never take custody of Aragon funds and will use a suitable technical solution for executing swaps in a permissionless way
   3. This 4/7 multisig will be composed of 7 individual members or entities and will not be authorized to function with fewer than 7 members
   4. A new signer who doesn’t otherwise participate in the Token Rewards Program will be eligible to participate. This will enhance governance decentralization of Lido DAO by adding new members over time consistent with the loyalty to the project. These signers would be eligible to receive the equivalent of 25 ETH a year in LDO tokens, priced on the day the signer joins the multisig for the first time (subject to usual TRP rules including milestones, for example current version of TRP LDO exchange rate calculation is “calculated as the trailing 180-day close price of LDO, using the following Dune query”)
   5. If any signer fails to register their approval or rejection on at least 50% of the Actions proposed in a given year, their TRP program membership (if any) will forfeit and the signer will be rotated from the multisig and removed from the Committee
   6. Members will retain membership of the Committee until they offboard either of their own accord or by token holder demand, forfeiting any pending TRP tokens, and leaving the multisig seat open for new prospective members to be approved by token holders
   7. Deliberations, Strategies, and Actions will be communicated transparently to the DAO and the community is encouraged to engage, propose and participate
   8. New prospective members can apply in public forums to empty Committee seats and request approval of their inclusion into the Committee by token holders, an approval which will instruct the Committee to rotate the new member/s onto the empty place/s on the multisig
2. Committee may submit Strategies and enact Actions
   1. All Strategies must be encodable into Actions through On-chain tools
   2. All deployed on-chain Actions will allow for at least 72h of token holder veto periods prior to deployment or execution
   3. The Committee will submit these Strategies in the following way:
      1. The committee will publish a forum post submitting the Strategy (e.g. sell stETH in Aragon for one of a pre approved list of tokens)
      2. No sooner than 7 days from the moment it is published, the treasury multisig can initiate the start of an on-chain Action or series of Actions
   4. The Committee will regularly provide transparency reports
3. Committee may propose modifications to authorized Strategies
   1. The Committee may elect to propose changes or new Strategies, provided they are encodable into Actions through On-chain tools
      1. To enact a new rule or change, the Committee will publish a forum post outlining the change to request comments and allow for a feasibility study
      2. No sooner than 7 days from the moment it is published, if suitable as an on-chain Action, token holders will vote on the approval of the deployment of an on-chain Action to reflect the new Strategy, or change in Strategy
   2. The Committee will maintain an up-to-date frontend listing the Principles, all of the Strategies they are authorized to submit and links to the relevant on-chain Treasury Actions for these rules
   3. The Committee will only be able to propose changes or new rules provided 4/7 members register their agreement with the proposal
   4. Community members may propose a new Strategy to the Committee for consideration, but the Committee will need 3/5 members to register their agreement prior to submitting these changes
4. Committee mandate is bounded by token holder approval
   1. Token holders may choose to dissolve the Committee at any time through a vote, following which the Committee will disband, terminate the TRP if necessary and remove its access from any on-chain motions
   2. Should an overall governance framework be agreed on by token holders at a later date, this could lead to the ratification, modification or dissolution of the Committee
5. Committee’s ultimate objective is to automate itself
   1. The Committee is charged, in the long-term, with identifying and implementing ways of automating its deliberations and replacing the function of the Committee with permissionless smart contracts with no dependencies, capable of replacing the above workflow in a neutral manner

On-chain tools

These are on-chain contracts or function calls, such as EasyTrack motions or Aragon votes, that can execute any Actions triggered by the Committee multisig. Token holders authorize the Committee to request the development of new Actions to the Lido Contributors Group. Alternatively, token holders authorize the Committee to propose development projects to the Lido Contributors Group, with separate funding requirements, if needed. Any new development must undergo strict security procedures and audits prior to being used in production.

Treasury Management Strategies

An example of the Strategies that could be submitted by the Committee are the following:

• Hold no more than 6mos of estimated working capital to fund research, development, education and advocacy initiatives (based on approved budgets) in stablecoins in Aragon
• Hold only DAI, LUSD and USDT in stablecoin reserves (60% USDT, 40% DAI)
• Only use CoW Swap as a preapproved trading venue

Treasury Management Actions

An example of the Actions that could be executed by the Committee are the following:

• Stake any ETH held in the Aragon treasury using Lido
• Sell stETH or any other tokens in Aragon for one of a list of preapproved stables through a preapproved trading venue

The example flow for enacting a Action to sell stETH for stablecoins could look like the below:

The example optimistic governance flow from Strategy proposal to Action enactment:

Initial Treasury Management Committee composition

The below slate of prospective Treasury Management Committee members helped, among others, in producing this proposal and is proposed concurrently with this vote. Note that karpatkey and @marcbcs are Lido DAO members who are not pre-existing contributors. They will be entitled to apply for membership in the TRP program based on the rules approved in the Proposal.

Composition

The proposed initial composition of the Committee is as follows:

• @karpatkey: 0x7d4FDba7d1b22834eA75B5E45e4110Bf56E690f1 (eligible for TRP)
• @marcbcs: 0x98308b6dA79B47D15e9438CB66831563649Dbd94 (eligible for TRP)
• @steakhouse: 0x9106CBf2C882340b23cC40985c05648173E359e7 (not eligible for TRP)
• @pipistrella: 0x5da409e1cbDABeC67471dB01Ff956f804bb8879f (not eligible for TRP)
• @sabrychiaa: 0x83a8b5c6990cbc78ffc45cbbfe5748b895973623 (not eligible for TRP)
• @Mol_Eliza: 0x620bd63538bf10a87214b6187f5bc85926c2971f (not eligible for TRP)
• @kadmil: 0x9a3f38af97b791c85c043d46a64f56f87e0283d4 (not eligible for TRP)

Non-voting committee observers, not eligible for TRP, but motivated to contribute to discussions:

• @nicole_maffeo
• @Red_Bull