Lido DAO has proposed a significant $20 million buyback of its LDO tokens as the market price nears all-time lows. This strategic move aims to stabilize the token, which has seen a sharp decline in its valuation, and reinforce Lido’s position as Ethereum’s leading liquid staking protocol.
Lido DAO’s Token Buyback Proposal
The governance proposal, introduced by the Lido Ecosystem Operations team, seeks permission to spend up to 10,000 stETH from the DAO’s treasury to acquire LDO tokens. With Ethereum’s current price hovering around $2,000, this buyback equates to approximately $20 million. At present, the LDO token trades close to $0.31, rebounding slightly from its all-time low of $0.27 observed on March 7.
Understanding Market Dynamics
The LDO-to-ETH ratio is now around 0.00016, marking a 70% discount compared to levels over the past two years. The proposal highlights this as one of the most significant discrepancies between LDO’s market price and its underlying protocol fundamentals in history.
Execution and Strategy
The buyback is not part of Lido’s routine strategy but a one-time initiative distinct from the NEST automated buyback program. The NEST mechanism, slated for activation in Q2 2026, will only commence when ETH surpasses $3,000, and Lido’s revenue exceeds $40 million, capping annual spending at $10 million.
On-chain liquidity for LDO remains thin, with only about $90,000 depth at a 2% variance. The Lido Growth Committee plans to execute the buyback in 1,000 stETH batches across platforms like CoW Swap, Uniswap, and centralized exchanges such as Binance and OKX. These exchanges offer more than $100,000 in depth, facilitating the process.
Despite the market price dip, Lido’s protocol performance hasn’t deteriorated as significantly. Protocol rewards fell by 20%, whereas the LDO:ETH ratio dropped by 50%. Notably, costs improved by 13% year-over-year, and the effective take rate rose from 5% to 6.11%.
Market Position and Future Outlook
Lido remains the dominant staking protocol on Ethereum, holding a 23% market share. This buyback initiative reflects the DAO’s commitment to leveraging its treasury to support token value and maintain its market leadership.
The proposal is designed to be swift and more substantial than previous efforts, capitalizing on what the DAO perceives as an undervalued LDO token.
