Ethereum Staking Platform Faces Dilemma Over Its $30M Treasury

Ethereum’s largest pool Lido Finance is contemplating whether to sell or stake the $30 million in Ether[ETH]from its treasury.

On February 14, Steakhouse Financial, the DAO’s financial wing, issued a proposal with four possibilities on how it should run its treasury.

One of these involved staking some or all of its Ethereum as Lido Staked ETH [stETH] on the platform. Another option would include LidoDAO selling some or all of its 20,304 ETH for a stablecoin in order to increase the DAO’s runway.

Since 2021, LidoDAO holds 20,304 ETH in treasury. The DeFi protocol team anticipates impending withdrawals and is cautious about excessive staking because it could result in a lack of Ether being available “in case of emergency.”

The protocol has held on to these through thick and thin during various stages of development of the core product. With withdrawals on the horizon, has the time come to stake it in Lido, exchanging it for stETH? The DAO could choose to do other things with its holdings, including sell it but this proposal is not exclusive to it, i.e. token holders could decide to sell 10k Ethereum tokens and stake the rest, for e.g.

The move comes amidst growing concerns in the wake of the SEC’s recent crackdown against crypto-staking platforms in the U.S.

Ethereum Staking At Risk?

Jacob Blish, who oversees business development at Lido’s decentralized autonomous organization expressed concern over the developments in a Feb. 13report.

The biggest fear, according to him, is that the SEC may eventually forbid American citizens from using crypto-staking services, including protocols.

“The biggest risk I personally see as a U.S.-based person is if they come down and say you can no longer even interact with or contribute to these types of protocols.”

“Then me, as a contributor to the DAO, does that mean I can’t work on Lido anymore? Do I have to go leave and do something else?” Blish added.

As reported by TronWeeklySEC charged crypto exchange Kraken with “failing to register the offer and sale of their crypto-asset staking-as-a-service program,” prompting the exchange to stop offering staking to its U.S. customers.

The regulator’s latest action invited criticisms from market leaders including Coinbase co-founder and CEO Brian Armstrong who in a Feb. 9 tweet, said it would be “a terrible path for the U.S.” if a staking ban was to happen.