Lido Finance launched voting for the "diversification" of an existing treasury in order to prepare for the bear market, according to the voting page on the decentralized governance platform.
The vote that opened 14 hours ago is offering a plan to sell 2% of the total LDO supply at the price of $1.45. The company Dragonfly will lead the investment and purchase 10 million tokens. The sold amount will be unlocked immediately and given full voting rights to a buyer.
According to the voting page, the price of $1.45 per LDO token is considered "appropriate" and can incentivize participants to become a part of the Lido decentralized autonomous organization.
Funds collected via the sale provides the DAO with a "runway" and a buffer to avoid immediate selling pressure. But while offering the sale, its creators understand that the course highly depends on market conditions.
Despite having a detailed sale structure and the OTC nature of the deal, some LDO holders were not so happy about the existing proposal and sold their tokens on the market, aggravating the 20% correction we saw since yesterday.
Main reason behind LDO rally
The Ethereum Merge update is the main fuel of the current LDO rally, considering Lido Finance's part in the Ethereum 2.0 staking contract. The release of the date for the update caused a massive rally of LDO token, bringing its holders an almost 200% profit in the last few days.
Expectedly, the token was extremely overbought and faced a short-term correction that was fueled by the aforementioned sale proposal. If the deal was pushed through via exchanges, the token would have faced massive selling pressure since the sale amount represents 25% of LDO's daily volume.