Lido DAO proposes $20M LDO buyback to fix price dislocation

• Lido DAO has proposed a $20 million buyback of its native LDO token to address what it describes as a historic price dislocation.
• The proposal involves swapping 10,000 stETH from the DAO treasury for LDO, as the token is currently trading 95.9% below its all-time high.
• Despite the price drop, Lido remains the dominant force in liquid staking, controlling 23.2% of all staked Ether.

Details of the Buyback Proposal

The Lido DAO is looking to utilize its treasury to support the LDO token, which members argue is significantly undervalued. The plan involves exchanging 10,000 Lido Staked Ether (stETH) for LDO governance tokens. To minimize market volatility and prevent drastic price swings, the DAO plans to execute the buyback in smaller batches of 1,000 stETH.

The execution strategy will rely on limit orders or a dollar-cost averaging (DCA) approach. Each individual batch will require specific approval from tokenholders, and the results of each transaction must be reported before the next phase of the buyback can proceed. This move follows a previous, non-implemented suggestion from November to establish an automated buyback mechanism.

Market Performance and Price Dislocation

Currently, LDO is trading at approximately $0.30, a stark contrast to its peak of $7.30 in August 2021. With a market capitalization of $255 million, it currently ranks as the 141st largest cryptocurrency. The DAO highlighted a significant "dislocation" in the token's value relative to Ether (ETH), noting that the LDO/ETH ratio of 0.00016 is roughly 63% lower than its two-year median.

Lido leadership maintains that this price drop does not reflect the protocol's actual performance. While the protocol's dominance has previously raised concerns regarding network centralization, it continues to hold the top position in the Ethereum liquid staking market.

Financial Health and Protocol Fundamentals

Financial data for 2025 indicates a period of adjustment for the protocol:

• Total revenue decreased by 23% to $40.5 million.
• Staking fees fell to $37.4 million, also a 23% decline.
• Operating costs improved by 13% compared to the previous year.

Despite the drop in total revenue, the DAO pointed to several fundamental strengths. The protocol's "take rate"—the percentage of rewards kept as fees—increased from 5% to over 6.1%. Furthermore, while overall rewards declined by 20% during a broader market downturn, the DAO argues that the protocol's ability to capture fees has actually been enhanced.