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The dawn of regulatory environment improvement is emerging. Why is Lido expected to be a big winner?
With the expected improvement in the regulatory environment, the author believes that the ETH Staking zone will be the zone with the most direct benefits, and the leading project Lido may also be able to break free from the current price dilemma. (Background: SEC sues Metamask! Lido, Rocket Pool stakeToken are classified as securities, and the United States hunts down unregistered encryption) (Background supplement: Gary Gensler's farewell speech? What encryption regulatory policies will the SEC under Trump 2.0 adopt?) We know the proverb 'Buy the rumor, sell the news.' Before the election in October, the author released the article 'The New Value Cycle of DOGE: Political traffic potential and Musk's 'Government Efficiency Department' (D.O.G.E) political career,' which received a good response and expected results. The author also gained a considerable investment return, and I would like to thank everyone for their encouragement and support. Personally, I believe that there will be many similar trading opportunities during the period before Trump officially takes office. Therefore, the author has decided to start a series of articles, 'Buy the Rumor Series,' to explore and analyze the current market hotspots and extract some trading opportunities. Last week, there was a very noteworthy phenomenon worth following. With Trump's strong return, the market has begun to speculate on the potential resignation of Gary Gensler, the Chairman of the SEC. You can see related analysis articles on potential successors in most mainstream media. In this article, let's analyze which cryptocurrency will benefit the most directly from the expected improvement in the regulatory environment. To start with the conclusion, I believe that the ETH Staking zone will be the zone with the most direct benefits, and the leading project Lido may also be able to break free from the current price dilemma. Review of the regulatory difficulties encountered by Lido: Samuels v. Lido DAO lawsuit. First, let's supplement some basic information. We know that Lido is the leading project in the ETH Staking track, providing non-custodial technical services to help users participate in Ethereum PoS and earn profits, and reducing the technical threshold for the entire process and the 32 ETH funding threshold for Ethereum Native Staking. The project has gone through three rounds of fundraising, raising a total of $170 million. After its launch in 2022, with the first-mover advantage, Lido's market share has remained at around 30% for years. As of now, according to Dune's data, Lido also maintains a 27% market share, and there has been no significant decline, indicating that Lido is relatively strong in terms of business demand. The reason for Lido's current price slump can be traced back to the end of 2023, when the price of its governance Token LDO reached an all-time high, and the Market Cap reached $4 billion. At this time, a lawsuit changed the entire price trend, which is the Samuels v. Lido DAO case, docket number 3:23-cv-06492. On December 17, 2023, an individual named Andrew Samuels filed a lawsuit against Lido DAO in the Northern District of California Federal District Court in the United States, alleging that the defendant Lido DAO and its cooperating venture capital company violated the provisions of the 1933 Securities Act by selling LDO Tokens to the public in an unregistered manner. In addition, Lido DAO created a highly profitable business model by pooling users' Ethereum assets for staking, but failed to register its LDO Token with the United States Securities and Exchange Commission (SEC) as required. Plaintiff Andrew Samuels and other investors purchased LDO Tokens believing in the potential of this business model and ultimately suffered economic losses, so they sought legal compensation. This case not only involves Lido DAO, but also includes allegations against its major investors, including AH Capital Management LLC, Dragonfly Digital Management LLC, Lido DAO, Paradigm Operations LP, Robot Ventures LP, and others. According to the information on the progress of the entire case, these institutions received subpoenas from the court one after another in January 2024, when the price of LDO was at its highest. Subsequently, the legal process between the lawyers of the investment institutions and Andrew Samuels has been limited, so the relevant influence has not spread. It was not until the first motion hearing on March 28, 2024, and the judgment was confirmed on April 10, 2024, after modifying some related terms, that the case was accepted as a matter of fact. Later, on May 28, 2024, Andrew Samuels' legal team unilaterally announced a motion to declare Lido Dao in absentia. The reason for this action is that the Lido DAO side believes that it does not operate in the form of a company, so it did not respond to the lawsuit. If it is finally declared in absentia, it will lead to some unfavorable judgments for Lido, such as not defending itself, etc., and based on the similar Ooki DAO case, the result is unfavorable for the absent party. This motion was ruled in favor on June 27, and Lido DAO was required to respond within 14 days. After that, Lido DAO had to initiate a community proposal on July 2, 2024, to hire Dolphin CL, LLC in Nevada as defense counsel, and applied for related expenses of 200,000 DAI. Since then, the case has been widely known to the community. After several rebuttals between the two parties, the case seems to have entered a calm period after September. At the same time, another case also had a substantial impact on Lido, which is the Consensys Software Inc. case brought by the SEC on June 28, 2024, docket number 24-civ-04578. Note that this date is the day after the judgment of the Lido case, when Lido DAO was fully informed of the judgment as an operating organization. In this lawsuit, the SEC believes that Consensys Software Inc. engaged in the unregistered issuance and sale of securities through its service called MetaMask Staking, and operated as an unregistered broker through MetaMask Staking and another service called MetaMask Swaps. According to the SEC's complaint, since January 2023, Consensys has represented Lido and Rocket Pool as providers of Liquiditystake plans and has provided and sold tens of thousands of unregistered securities...