In a move aimed at addressing a prolonged token price decline, Lido DAO has proposed a one-off $20 million buyback of its native LDO token, utilizing 10,000 stETH from its treasury. The proposal comes as LDO trades near historic lows, reflecting what the DAO describes as a major disconnect between market price and protocol fundamentals.
Proposal Details: 10,000 stETH Allocation
According to the governance proposal, Lido plans to convert up to 10,000 stETH (staked Ether)—valued at approximately $20–$21 million—into LDO tokens.
If approved, the initiative could result in the buyback of roughly 70 million LDO tokens, representing about 8.5% of the circulating supply.
The buyback would not be executed all at once. Instead, it will be carried out in smaller batches of 1,000 stETH, using a mix of decentralized and centralized exchanges to reduce market impact and slippage.
Each tranche would require governance oversight, with progress reports submitted before further execution.
Why Lido DAO Is Considering a Buyback
Lido DAO argues that its token is significantly undervalued compared to its underlying performance. The proposal highlights that:
- LDO is trading at a steep discount relative to ETH, with the LDO/ETH ratio at historically low levels.
- The token has dropped over 95% from its all-time high, despite relatively stable protocol fundamentals.
- The DAO considers this a “significant dislocation” between price and actual network performance.
Even as the token price declined sharply, Lido has maintained a dominant position in Ethereum staking, controlling a substantial share of staked ETH.
Market Pressure and Declining Metrics
The buyback proposal also comes amid broader challenges:
- Lido’s revenue reportedly fell 23% in 2025, reflecting reduced staking yields and increased competition.
- Large investors (whales) have offloaded nearly 80 million LDO tokens in recent months, adding downward pressure on prices.
Despite these headwinds, the DAO maintains that operational efficiency has improved and that the market has overreacted to short-term declines.
Execution Strategy and Risk Controls
The proposal outlines several safeguards to ensure transparency and minimize risks:
- Batch-based execution (1,000 stETH per cycle)
- Use of limit orders or dollar-cost averaging strategies
- Trading across platforms such as decentralized exchanges and major centralized venues
- Strict slippage limits and governance oversight
All purchased LDO tokens would be returned to the DAO treasury, and the process could be halted at any stage by token holders.
Industry Context: Buybacks in DeFi
Token buybacks are becoming increasingly common in decentralized finance (DeFi), mirroring traditional stock buybacks in equity markets. Such strategies are often used when organizations believe their assets are undervalued.
However, the approach remains controversial. Critics argue that using treasury funds for buybacks may divert resources away from innovation and ecosystem development, while supporters see it as efficient capital allocation during undervaluation cycles.
What Happens Next?
The proposal is currently under community review, and its implementation depends on governance approval. If passed, it could provide short-term price support for LDO and signal renewed confidence from the DAO.
At the same time, analysts note that long-term recovery will likely depend on broader market conditions, investor sentiment, and sustained protocol growth, rather than buybacks alone.
