LEGO Q1 2024 - Report
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LEGO Q1 2024 - Report

As we continue into the spring of 2024, it's a great moment to reflect on LEGO's Q1 achievements. This quarter, we heavily invested in Security and Decentralization, showing our commitment to these crucial areas. We also supported Analytical Tools and various innovative projects, leading to a significant investment of $205.5K. Through this report, the LEGO committee hopes you'll gain insights into the progress and dynamism within our ecosystem during the early part of 2024. Enjoy discovering the strides we've made!

Issued grants structure

To ensure maximum transparency, the LEGO committee has produced a regular report highlighting the accomplishments of the first quarter of 2024. You can always check financial transactions database for a complete history of disbursed grants.

In this quarter, Decentralization support grants led with a total of $82.4K. Following closely were allocations for Research ($34.5K), Bug bounties ($23.1K), Integrations ($20K), Analytical tools ($18.9K), and Community support ($13.9K), alongside other grants, distributing funds across a wide spectrum of initiatives to enhance and expand the ecosystem's capabilities and reach.

Overall, the disbursed grants for Q1 2024 amounted to $205.5K.

Please refer to the following radar chart for a visual representation of grants by categories:

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On the next chart you may find grant amounts by initiators.

Some other grants for this report purpose were reallocated from LEGO multisig to persons, who lead it mostly (Staking Decentralization Study ā†’ Izzy; stETH token integration to all Electrocoinā€™s platforms ā†’ Jakov; Staking Router Distribution Mechanisms Research ā†’ Vshvsh).

After this adjustment the most productive grantor isā€¦ šŸ„ kadmil! with $25.3K šŸ„‡, congratulations! Followed by IzzyšŸ„ˆ with $20.5K and JakovšŸ„‰ with $20K.

1. Decentralization Support

1.a Request for Proposal | CSM and SDVTM integrations

Lido DAO Community Staking team contributors made an RFP calling out software providers specializing in node/validator setup to enhance their existing tools by incorporating a user-friendly pathway for community stakers to engage with the Lido Community Staking Module (CSM) and Lido Simple DVT Module (SDVTM) as Node Operators (NO). Thank you all who reacted to this request! LEGO council teamed up with CS contributors to carefully review all applications and came up with the shortlist of most promising ones in terms of community staking solution popularity, overall expected budget, level of integration and the time frame appropriateness. Only SDVTM integrations were reviewed though, due to CSM specs not ready at the moment it took place (so most probably CSM applications will be reviewed in Q2 2024). The picked 3 projects are:

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1.b Staking Decentralization Study

leobago from MigaLabs reached out to LEGO with the proposal to support Staking Decentralization Study. In this project folks from MigaLabs want to measure the level of (de) centralisation in the Ethereum validator set by calculating the market concentration of node operators, adjusted for how correlated they are to each other. The reason for this is that even if there are thousands of different node operators, each with a relatively equal market share (under 1%), there could still be a relatively high risk of centralisation if they are all based in the US, all using AWS, and all using the same client software, etc.

MigaLabs will work on this project with @orbmis (Consensys), and they will deliver a full research paper explaining the methodology used, including the datasets used for the research, the mathematical tools used, the implementation of the data analysis, and our conclusions. The objective is to publish this article in arXiv for the community to access it easily and submit it to an internationally renowned conference. LEGO supported this project with $16,000.

2. Research

Following grants constitute this category:

  • Staking Router Distribution Mechanisms Research ($13,500);
  • User Research and Activation Plan to engage new token holders in Lido DAO Governance by OpenUX ($10,950);
  • EIPs For Nerds research grant proposal ($10,000).

2.a. Staking Router Distribution Mechanisms Research

Felix Lutsch requested a grant to conduct a research that provides a comprehensive list and comparison framework for the Lido DAO to evaluate distribution mechanisms of ETH to staking router modules such as SimpleDVT. As accepted modules mature and further modules emerge, a mechanism to determine how ETH deposited into Lido should be allocated towards modules is required. To illustrate with an example: should the curated module receive 90% of the stake, while SimpleDVT and Community Staking receive 5% each? Or should the stake be split evenly between all modules? How dynamic should the distribution be? Should it be possible to limit how much stake modules can receive? This grant aimed to produce a research report that provides the necessary context, an exhaustive list of options, as well as a comparison between hypothetical mechanisms for distributing ETH to staking router modules on a continuous basis.

LEGO council approved this grant and 1st part of it was disbursed during Q1 2024 ($13,500), the remaining part of the grant to be issued in Q2 2024.

On the recent Node Operators Community Call Felix presented the results of the research:

In this report Felix reviews Staking router module characteristics, stake distribution key consideration and and possible distribution mechanisms. For the text version of it please check out the forum post.

2.b. User Research and Activation Plan to engage new token holders in Lido DAO Governance by OpenUX

A thriving and engaged community is essential for a healthy DAO. Without it, DAO activity may slow down or even come to a halt, leading to apathy towards necessary votes for the project's vitality. For example, if LDO holders do not show interest in the project and ignores to participate in votes, it could result in the postponement of various initiatives due to a lack of quorum, despite a general consensus. For example some recent Aragon votes didnā€™t manage to reach quorum for any option (#170, #169, #168). In an attempt to improve the situation OpenUX team proposed an in-depth user research project, targeting token holders with 100k-1M LDO who are not active in governance. The project aims to find a way to activate new voters and discover missed channels for communication with them. Involves outreach, interviews, creation of behavioral personas, and an activation plan. This project aims to answer following questions about 100k-1M LDO holders who donā€™t take part in governance:

  • What types of behaviors do they exhibit outside of Lido DAO?
    • What work do they do, where do they hang out online, what other types of crypto activities do they participate in?
    • Which channels can be used to find them?
    • How can OpenUX team activate them?
  • What are the current blockers to them participating in Lido governance?
  • and many more (check out the full proposal).

LEGO council approved the grant and disbursed its first part in amount of ($10,950).

2.c. EIPs For Nerds research grant proposal

EIPs, or Ethereum Improvement Proposals, are documents that outline new features, processes, or environments affecting the Ethereum blockchain, including its core protocol specifications, client APIs, and contract standards. They play a crucial role in the Ethereum ecosystem's evolution, offering a formal way for developers and stakeholders to propose, discuss, and implement changes to the platform. In addition to being a vital part of Ethereum development EIPs also may be really challenging to understood due to many reasons like technical complexity, terminology used, Interconnectedness, constantly evolving standards, and many more. This is where various resources come to the stage (like forums, blogs, articles, etc.), that could explain and highlight the most important changes proposed. One of such resources is EIPs For Nerds - a research series (published on the Ethereum 2077 blog). Each EIPs For Nerds article provides a comprehensive overview of an EIP (an ELI5 description of the EIP spec is usually part of the article) and assists in shaping consensus around the EIP by discussing potential benefits, drawbacks, and considerations associated with the EIPā€™s implementation.

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Eawosikaa reached out LEGO seeking a grant of $10,000 (proposal link) for the pilot phase of the EIPs For Nerds project that will last for four months (February 2024 to May 2024) during which Ethereum 2077 will aim to publish a detailed overview + research report on a selected EIP on a weekly basis. Altogether, a total of ~16 EIPs will be covered by work funded by this grant. The Ethereum 2077 website (EIPs For Nerds section) will serve as a source of truth for progress on the project. LEGO decided to support this project (thank you theDZhon for facilitating the grant disbursement šŸ„³).

3. Bug Bounties

Bug bounties play a crucial role in cybersecurity, incentivizing individuals to find and report vulnerabilities in systems before they can be exploited maliciously. This proactive approach to security helps organizations and protocols identify and rectify weaknesses, ensuring the safety and integrity of their systems. Upholding this vital aspect of cybersecurity, the LEGO committee remains committed to fulfilling its responsibility once taken to reward these contributions through Immunefi, a platform that streamlines the process of reporting and compensating for such discoveries. During Q1 2024 several bounties were payed out totaling $23,100 (incl. 10% Immunefi fee).

4. Integrations

The grant application from Electrocoin focuses on integrating the stETH token into three of its platforms, aiming to enhance crypto-fiat transactions, enable crypto payments across various sectors, and facilitate crypto exchanges at physical locations. These platforms are:

  • Bitcoin mjenjacnica platform which allows users to trade fiat for crypto and vice versa, including crypto-to-crypto transactions, without needing an account for its non-custodial exchange. It supports paying SEPA invoices with cryptocurrency. Users can also opt for a custodial service, enabling trading, depositing, and withdrawing of stETH token, and using stETH for payments where Electrocoin's payment service is accepted.
  • PayCek - is an electronic payment processing service intended for businesses and individuals that want to be able to accept cryptocurrency payments, e.g. for various freelancers, all types of merchants, caterers, webshops, fiscal cash registers, polyclinics, hoteliers, etc. Fiat currency is regularly and automatically paid out to the merchantā€™s bank account with no interaction with any cryptocurrency on the clientā€™s part.
  • Currency exchange, through which clients can exchange crypto to paper fiat and vice versa on physical locations.

This integration seeks to leverage Electrocoin's established user base and infrastructure, offering direct access to stETH for a wide range of transactions and payments. It is anticipated to enrich the Lido ecosystem by broadening its user base and applications in real-world transactions, thereby supporting the ongoing development, marketing, and expansion of Electrocoin's services. For a detailed overview of the project, its goals, and its impact on the Lido ecosystem, you can visit the original post on the Lido research forum. LEGO council supported this integration with $20,000 grant.

5. Analytical Tools Development and Support

Following initiative are grouped into this category:

  • Glassmarkets Q1 2024 ($15.9K)
  • Hildobby Eth Staking Analytics ($3K)

5.a. Glassmarkets Q1 2024

Second quarterly grant of 5K LDO (approx. $15.9K at the moment of the tranche) was made to Glassmarkets for dashboard to monitor stETH liquidity at centralized exchages proposal, used by Liquidity Observation Lab committee.

5.b. Hildobby Eth Staking Analytics

1K LDO appreciation grant (approx. $3K at the moment of the tranche) has found its owner - hildobby! LEGO thanks you for continuous excellence of your dashboards about Ethereum staking, like this wonderful Beacon chain Ins/Outs dashboard. Thank you for your unwavering commitment and for helping pave the way towards a more transparent and efficient Ethereum staking ecosystem.

6. Community Support

  • Spanish Lido documentation translations + animated video series ($9K) - soon to be live at https://help.lido.fi
  • "Cryptocurrencies: How does it work" Limited Edition Book Grant ($2K)
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"Cryptocurrencies: How does it work" is a children's book that introduces the concept of cryptocurrencies, digital money, and blockchain technology. The story revolves around a group of heroes who create their own monetary system, transforming ordinary candy into cryptocurrencies. Through their journey, the book explains various topics, including personal data networks, transactions, blockchain, and crypto wallets. It also covers the roles of miners and stakers, how to build blocks, and emphasizes the practical uses of cryptocurrency.

Other grants in this category include:

7. Protocol Development

8. Various notable grants

LEGO Q1 2024 Results

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Overall budget used during Q1 2024 was $205,498 using daily average prices of LDO where appropriate, which constitutes 41% of total $500K allocated per quarter.

Token budget split of 20% / 80% LDO / DAI set out previously looks to stay relevant. As we can see grants by tokens split for 12 months of 2023 was 91.3% stables and only 8.7% LDO, whereas Q1 2024 structure is 11.8% LDO and 88.2% USD stable tokens.

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Community Lifeguards Initiative

The Lido Community Lifeguards Initiative (CLI) pilot passed and considered successful by LEGO committee. Although Eridian has decided to step down from its position as CLI leader, Enti and Stakesaurus are eager to further develop this initiative. They are currently working on reforming this project and we will soon see a proposal to improve it, stick around.

For more details about CLI achievements during the pilot please refer to its Q3 2023, Q4 2023 and Q1 2024 reports.

Stay tuned, stake safe!