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Lido hoped to draw Arbitrum grant funding with the allure of bringing its behemoth staked ether product to the layer-2. But so far, the Arbitrum governance community is almost evenly split.\u00a0<\/p>\n
Five days into voting, Lido\u2019s grant proposal faces an uphill battle, with just 50.2% of votes cast in its favor and 41 proposals earning more yes votes \u2014 and therefore passing Lido in the funding tiebreaker.\u00a0<\/p>\n
At first glance, Lido looks like a promising candidate for Arbitrum incentive funding. The protocol holds<\/a> almost $14 billion in staked ether, per Token Terminal, and its grant proposal<\/a> said Lido hopes to make Arbitrum the first layer-2 where users can mint its stETH product natively.<\/p>\n But Lido\u2019s<\/a> proposal immediately met resistance from DAO members who felt that its roughly $3.5 million grant, fourth-highest among the 97 proposals, wasn\u2019t justified by its importance.<\/p>\n \u201cSimply having a high TVL [total value locked] is not a warrant to take a [lion\u2019s] share of the grant,\u201d one DAO contributor wrote under the proposal.\u00a0<\/p>\n Read more:<\/strong> $88M in Arbitrum grant proposals are competing for a $44M pot<\/a><\/p>\n Arbitrum DAO\u2019s mixed feelings on Lido also stem from its large share of staked ether. Other DAO contributors expressed centralization concerns with Lido<\/a>, which currently controls around 32% of all staked ether, expanding its presence on one of Ethereum\u2019s<\/a> largest layer-2s.\u00a0<\/p>\n The proposal\u2019s largest voter deployed<\/a> their $10.5 million-worth of Arbitrum (ARB<\/a>) tokens in opposition to Lido, writing: \u201cCan\u2019t create incentives for Lido right now\u2026let\u2019s be real.\u201d<\/p>\n Lido\u2019s Seraphim Czecker told Blockworks in a direct message on X that Arbitrum<\/a> only stands to gain from the proposal, which he says is likely to bring \u201cmainnet whales\u201d to Arbitrum. But many in the DAO are weighing those potential whales against Lido\u2019s worrisome size.<\/p>\n \u201cAs Arbitrum, are we thinking about the security and the decentralization of liquid staking, or are we thinking about growing ourselves where we\u2019re getting more whales, where there\u2019s the minting of staked ETH on Arbitrum? I think that\u2019s the biggest question,\u201d Alex Lumley, product developer at fellow grant applicant Savvy DeFi, said.<\/p>\n Don\u2019t miss the next big story \u2013 join our\u00a0free daily newsletter<\/a>.<\/strong><\/p>\n
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