Lido DAO Proposes $20 Million LDO Buyback to Boost Price After 95% Slide

Lido DAO has proposed a one-off buyback of $20 million worth of its LDO token using 10,000 stETH from its treasury. The initiative aims to address a historically low valuation and align the token's price with the protocol's fundamentals.

The current LDO/ETH ratio is at 0.00016, which is 70% below its two-year average. This dislocation is seen as an opportunity for the DAO to act. The buyback is expected to absorb approximately 65 million LDO tokens, or about 8% of the circulating supply.

The buyback plan will be executed in smaller batches of 1,000 stETH. This approach aims to reduce market impact and allow for community oversight. Each batch will require separate approval from tokenholders before execution.

Why Did This Happen?

Lido's token price has fallen significantly. LDO is currently trading at $0.30, which is a 95.9% drop from its 2021 peak of $7.30. This decline has created a valuation gap despite the protocol maintaining strong operational performance.

Lido's 2025 revenue declined by 23%, but the protocol's take rate increased from 5% to 6.11%. This improvement in revenue capture is viewed as a sign of operational efficiency.

The DAO argues that the token is undervalued compared to Ethereum, with the LDO/ETH ratio at a level not seen in years. The buyback is intended to signal confidence in the protocol's future and stimulate demand for LDO.

How Did Markets React?

The market has shown mixed signals since the announcement. LDO is currently trading near $0.31, a level that is still significantly below its all-time high. Investors are watching for signs of stabilization.

Some analysts suggest that the buyback could provide short-term support for the token. The gradual execution of the plan aims to avoid volatility and maintain transparency.

The broader market remains a wildcard. While Lido's fundamentals are stable, the overall crypto market is still in a bearish phase. This means that the buyback alone may not be sufficient to drive a sustained price recovery.

What Are Analysts Watching Next?

Investors are closely monitoring the buyback's execution. The phased approach will require ongoing approvals from tokenholders, which could affect the speed and success of the initiative.

Analysts are also tracking the token's performance against key resistance levels. If LDO remains above $0.31 and moves toward $0.33, it could signal a short-term recovery. However, a fall below $0.28 may indicate further weakness.

The DAO is also considering longer-term strategies. The one-off buyback is separate from the proposed NEST automated buyback program, which could provide ongoing support if ETH prices rise above $3,000.

The success of the current buyback will depend on several factors, including execution speed, market conditions, and community confidence in the protocol's future.