Hey hey the biggest news maker of this quarter is without a doubt V2 upgrade of Lido protocol which will introduce 2 new major features:
- Staking Router: Thanks to a new modular architectural design, anyone can develop on-ramps for new Node Operators, ranging from solo stakers, to DAOs and Distributed Validator Technology (DVT) clusters. Together, they will create a far more diverse validator ecosystem.
- Withdrawals: This all encompassing Lido on Ethereum protocol upgrade will allow stETH holders to withdraw from Lido at a 1:1 ratio, realizing a key milestone of a truly open on / off ramping into the Ethereum staking ecosystem.
If you haven’t yet read about it 👀 LEGO committee strongly recommends to correct this and give 5-10 minutes of your attention to this article.
Issued grants structure
Keeping aligned with Lido’s goal of maximum transparency in addition to LEGO financial transactions database LEGO committee prepared regular report on what was achieved during the 1st quarter of 2023.
The most significant grants were disbursed into Research category totaling $394K for that period. Followed by Analytical tools development and support ($120K), Donations ($51K), grants for Legal development ($25K), Integrations ($20K) and other grants LEGO concluded Q1’2023 with total equivalent of $629,662 grants disbursed.
Please find a breakdown of grants by categories on the radar chart:
On the next chart you may find grant amounts by initiators. Most of grant were initiated by LEGO council members (significant part of it - grants to Nethermind of $350K to design a mechanism for good validator set maintenance phases 1 & 2). This Quarter the most productive grantor is Izzy with $81K, congratulations! 🥳 Followed by kadmil 🥈 with $37K and Jbeezy 🥉 with $28K.
This quarter was heavy for research initiatives, the most massive of which was Nethermind’s research to design a mechanism for a good validator set maintenance. Nethermind is a team consists of builders and researchers with expertise across several domains: Ethereum Protocol Engineering, Cryptography Research, Layer-2s, Decentralized Finance (DeFi), Miner Extractable Value (MEV), Smart Contract Development, Security Auditing, and Formal Verification, among others. The first phase of it was completed in December 2022 resulting in this database and after review, Snapshot vote and ET motion Nethermind received a grant of $150K for it. It represents a collection of 70 papers and protocols that have been selected and analyzed as follows:
- A summary note was prepared for each paper, which can be accessed by clicking on each paper’s title.
- Papers were rated from 1 to 5 according to their quality and originality. This is reflected in the “quality score” column.
- Papers were rated according to how relevant they are to Lido’s mechanism design problem. This is reflected in the “relevance score” column.
Before addressing the database we recommend read the proposal and documents in the preliminaries section. During second phase, their team will survey the literature and state-of-the-art approaches to white-labeling-protection. Nethermind will focus on arbiter protocols: oracles and prediction markets, to assess they usability in this problem. Then a mechanism that utilize an arbiter protocol to fight white-labeling will be proposed, followed by an investigation on how to disincentivize using white labeling operators. The present proposal was accepted by Lido DAO and focuses solely on this phase. Grant of $200K was disbursed upfront to Netehrmind team and remaining part of $250K is a subject to final results review. More details may be grasped in its’ text.
Rated came up with a proposal to produce a methodology for the “solo staker filter”. It should include:
- Defining who Rated has high confidence of being a professional node operator (based on our extensive existing library, and incremental clustering work we will do to fit more validator pubkeys into these material profiles) and excluding them from the list;
- Using all available Beacon Chain data (e.g. graffiti) and the Rated library of mappings to attribute the highest degree of association of that staker with an appropriate communication channel;
- Using EL data to associate validator associated identifiers (e.g. deposit address) with off-chain comms hubs (e.g. POAP collections etc).
The results of it should help Lido protocol to accommodate solo stakers. LEGO council finds this research crucial for further decentralization of liquid staking and decided to approve this grant of 8400.05 LDO ($20K using 14d TWAP per the proposal terms) to the Rated team.
ZK-proof based Total Value Locked oracle Lido Oracle contract is trustful - it relies on trusted third-parties and quorum mechanism for reports to maintain its state. It is possible to make the contract trustless, allowing any third party to adjust the contract state, and utilizing Zero Knowledge proofs to mathematically secure the correctness and validity of the change. This should lead to better security, cost savings and scalability. e-kolpakov conducted a research where one of possible ways of TVL oracle contract simplifications is reviewed. This way is usign StarkWare’s Cairo programming language and verifier (SHARP) to to make the oracle produce a verifiable ZK proof of the computation. The research reveiews examples on how to generate ZK proof, verify it and to check inputs and provides an implementation of such oracle - GitHub - e-kolpakov/cairo-balance. LEGO council appreciates e-kolpakov’s hard work made for this research to come true, which step by step leads Lido protocol to decentralization. The grant of $16K was apporved and disbursed. Please read the proposal for more details.
Other minor grants in this category were:
- EIP draft on withdrawer initiated exits help by plnmnlmp (unfortunately the draft has never saw the light of day) - $5K
- wstETH bridging research to Polygon - 1150 LDO ($3.3K approx.)
Analytical tools development
The remaining part of a $75,000 ($37,500 and $18,750 in accordance with the proposal terms) grant was disbursed to Metrika for a MEV Relay Dashboards and Alerts solution development to help Node Operators understand the performance of Relays in real time and make adjustments in case a Relay is not performing as expected. Lido members will have free access to dashboards and alerts for 6 months after delivery. After the 6 month period Metrika will ensure that access will be free for any Node Operators with ≤5 validators. Please read the proposal for more details on this grant.
Final part of $23,333.33 was disbursed to Rat3d team for a delivery of rated.network - a Swiss army knife for evaluating validators performance. Eliasimos with the team developed a scoring system and compressed info about validators in an easily legible and generalizable reputation score that can act as an input to human workflows but most importantly, machines (e.g. an API that acts as an input to insurance or token Smart Contracts). Check out its documentation for more details.
The final part of the grant for hosting and maintenance of Lido Validator Dashboard amounting $18,590 disbursed to abstract_df.
When this project began in late 2021, the tools available for the beacon chain were limited. However, since then, the tooling landscape has expanded and improved significantly. Although the dashboard created for the project on stakerops.io was innovative at the time, that is no longer the case. In short, the dashboard has fulfilled its purpose, and in late January 2023, it was decided to take it down to save on hosting and maintenance expenses.
Thank you for your long service abstract_df and stakerops.io
Toni Wahrstatter was supported with a pebble grant of 1,600 LDO for further development of MEV-Boost and tornado-warning dashboards showing MEV-Boost dynamics, main contributors and many more! Further development includes adding validator information and splitting up entities to different tabs.
But the first quarter of 2023 saw not only positive developments, unfortunately. The earthquakes that have recently struck Turkey and Syria are devastating, and our hearts go out to all those affected by this tragedy. LEGO committee understands the pain and suffering that earthquakes can cause, and we offer our deepest condolences to the families who have lost loved ones and our support to those who are dealing with the aftermath of this disaster. We stand with the people of Turkey and Syria during this difficult time and hope that the international community can come together to provide assistance and aid to those who need it most. Tim was one of the first to react to started donations collection by ETHGlobal and brought it to LEGO council. LEGO council donated $50,000 nominated in DAI to support people in Turkey and Syria.
Grants in legal category
The European Blockchain Association (EBA) reached out to LEGO committee looking for an opportunity to get the support from Lido community. EBA members have, up until now, largely worked on a volunteer basis to produce a number of policy and education materials, foster networking and grow the member base. You can find notable examples of this work in the proposal on the research forum. A lot of parties that are co-operate with Lido protocol are already EBA members, the list includes, but not concludes on following: Staking Facilities, Certus One, Chorus One and many more.
Here in LEGO we believe that regulatory developments and active participation in it not only of traditional markets representatives but ones of blockchain nature too is crucial for the further crypto adoption. That is why LEGO council decided to support EBA with $25K grant, reserving a seat in this association for Lido protocol representatives.
Please visit EBA governance site to know more about this association.
Back in July 2021, the team developing APWine - a protocol to tokenise, trade and hedge risk on future yield. The project was started in August 2020, and is backed by actors such as Delphi Digital, Spartan Group, DeFi Alliance and builders from the DeFi ecosystem, made a proposal to integrate stETH into APWine protocol. The team successfully implemented the initiative in December 2021 and added a stETH token, but the report on that got lost in the sands of time... Until Gaspard discovered this flaw and contacted the LEGO committee, after which justice was done and the APWine team found their reward!
9,292.82 LDO (using 2.1522 TWAP as of 12 MAR 2023 - date of communication of integration completed) were disbursed to Gaspard and APWine team.
Other nice grants
Grant for the help in defining the role, responsibilities and first deliverables for a head on core engineering
Q1 2023 LEGO results
Overall budget used during Q1 2023 was $629,662 using daily average prices of LDO where appropriate, which constitutes 125.9% of total $500K allocated per quarter. Funds exceeding the LEGO budget quarterly limit were requested using EasyTrack motions (#291, #357) after successful Snapshot voting for Nethermind grants (Snapshot #1, Snapshot #2). Q1 2023 was whopping +$382.5K or +155% vs Q4 2022 and +$90K or +17% vs Q1’2022. The proposal to diversify LEGO budget set the budget split to 40% / 60% of LDO and DAI. Grants by tokens split in Q1’23 was 88.2% stables, 11.8% LDO as most grants were requested to cover for incurred development, maintenance costs and 3-rd party services payment. Resulting split for 2022 year is 33.4% LDO, 64.5% stable coins, 2.1% ETH.
Stay tuned, stake safe!