Lido DAO’s decentralized autonomous organization is weighing a one-off $20 million buyback of its governance token, LDO, in a bid to address a pronounced price dislocation relative to Ether. The plan would swap 10,000 stETH tokens from the treasury for LDO, with proponents arguing that the governance token is undervalued given the protocol’s fundamentals.
The proposal, submitted on Friday, outlines a staged approach: the treasury would acquire up to 10,000 stETH in smaller batches of 1,000 and swap each batch for LDO. Lido argues this move could restore alignment between LDO’s market price and the underlying health of the protocol, a gap it says has widened to historically large levels. As part of the process, each batch would require tokenholder approval, and results would be reported before the next tranche proceeds.
“This is not a routine fluctuation. It represents one of the most significant dislocations between LDO’s market price and its underlying protocol fundamentals in the token’s history.”
The time to act comes as LDO sits at an extended discount to Ether. Lido DAO notes LDO trades at about 0.00016 ETH, roughly 63% below its two-year median. At the same time, Lido remains the dominant force in Ethereum’s liquid staking market, holding about 23.2% of staked Ether, according to Dune Analytics data. That leadership has not come without controversy; previous assessments flagged the potential centralization risks tied to a single protocol’s dominance in securing a large share of the network’s staking.
Price and market metrics underscore the scale of the challenge. LDO is currently trading around $0.30, down about 95.9% from its peak near $7.30 in August 2021. Its market capitalization sits near $255 million, placing it around the 141st-largest token by value. The plan’s proponents argue that the proposed buyback could shore up sentiment by demonstrating active governance-driven capital allocation tied to the protocol’s real-world performance.
Key takeaways
- The Lido DAO proposal would execute a one-off $20 million buyback by swapping up to 10,000 stETH from the treasury for LDO, in batches of 1,000 stETH each, using limit orders or dollar-cost averaging to manage volatility.
- Approval for each batch would be required from tokenholders, and results would be disclosed after every tranche before proceeding.
- LDO trades at a steep discount to ETH (approximately 0.00016 ETH per LDO, about 63% below the two-year median), despite Lido’s leadership in Ethereum’s liquid staking sector.
- Lido’s dominance has been cited in the past as a potential centralization risk for the network, though the current governance move focuses on price alignment and treasury management.
- Revenue and fee dynamics in 2025 show Lido’s take rate rising to 6.1% even as staking fees declined, with total staking revenue dipping amid a broader market retrenchment.
Mechanics, governance, and investor considerations
The proposed buyback plan hinges on a staged governance process. If approved, Lido would execute batches of 1,000 stETH each, swapping them for LDO until the 10,000-stETH target is reached. The strategy emphasizes price discipline: Lido intends to use limit orders or a dollar-cost averaging approach to smooth entry and avoid abrupt price moves. Each batch would require a new round of tokenholder approvals, and the DAO would report results after every step to maintain transparency and accountability.
The broader context includes a look at Lido’s earnings trajectory. In 2025, Lido’s revenue declined by about 23% to roughly $40.5 million, driven largely by a drop in staking fees to about $37.4 million. Despite the revenue dip, the protocol’s take rate—defined as the percentage of staked ETH rewards retained as fees—improved from about 5% to just over 6% in 2025. Lido argues that the core fundamentals remain robust even amid a wider market pullback and a 13% cost improvement in 2025 versus 2024.
The idea of a buyback is not entirely new within Lido’s ecosystem. In November, a member proposed an automated buyback mechanism to support LDO’s price, but that proposal has not been implemented. The current plan reframes the concept as a one-off, governance-driven initiative tied directly to the treasury’s assets and the DAO’s long-term interests.
Implications for holders and the broader ecosystem
If the proposal advances, the immediate effect could be a temporary lift in LDO’s trading dynamics, especially if the market interprets the buyback as a signal that the DAO is willing to put treasury-backed resources toward balancing token price with protocol fundamentals. For investors, the move highlights a visible attempt to align incentives between token economics and the platform’s operational strength, particularly given Lido’s entrenched position in Ethereum staking and its influence on validator economics.
However, the plan also introduces governance risk and execution risk. The need for multiple rounds of tokenholder approvals means outcomes will be contingent on community sentiment and turnout. Moreover, the market’s reaction will hinge on how the buyback intersects with broader SEC-like scrutiny, market liquidity conditions, and the pace at which LDO could absorb new supply without dampening demand for the token’s governance role.
Looking ahead, observers will be watching whether the DAO proceeds with the proposed schedule, how each batch performs relative to market conditions, and whether this approach invites further debates about token economics, centralization concerns, and the resilience of Ethereum’s staking architecture as it evolves post-merge.
Readers should monitor Lido DAO’s governance votes and the market’s reaction to any announced results from each tranche, as these steps will illuminate how the community weighs treasury-backed interventions against the need to maintain decentralization and protocol integrity in a challenging macro environment.
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