"Lido's LDO Buyback Plan Sparks Debate: Value Boost or Volatility Risk?"

Lido Finance has proposed the development of a modular system called NEST to facilitate potential LDO token buybacks, marking a significant step in the decentralized finance (DeFi) platform’s governance strategy. The NEST mechanism, currently open for voting with a 100% support rate as of September 29, 2025, is designed to convert stETH from the Lido DAO treasury into LDO through a technical framework. If approved, the first test of the system is expected in December 2025. The proposal emphasizes a phased approach, with initial research and design planning to commence immediately post-approval. Activation of the system, however, will require a separate on-chain vote, underscoring the decentralized governance model of the Lido ecosystem .

The NEST system operates as a modular framework that leverages stETH to repurchase LDO, redirecting the acquired tokens to the Lido DAO treasury. This process involves periodic STONKS Cowswap orders executed at configurable maximum sizes to mitigate slippage, with rewards distributed to executing addresses. The mechanism introduces a dynamic timelock and escrow system to manage stETH deposits, ensuring flexibility in response to market conditions. Parameters such as order frequency (minimum every 7,000 blocks) and slippage thresholds are subject to adjustment via Aragon DAO votes, reflecting the community-driven governance structure .

Complementing the NEST proposal, a separate dynamic buyback program for LDO was discussed within the Lido DAO. The program aims to utilize a $145 million treasury surplus, allocating 70% of liquid tokens to periodic buybacks while reserving 30% for operational and strategic use. This approach seeks to enhance token value by reducing supply and aligning incentives for long-term contributors. However, debates within the community highlighted concerns about potential volatility from threshold-based triggers and the need for transparency in treasury allocation. Critics argued that buybacks tied to treasury balances might decouple LDO’s value from Lido’s core staking performance, while proponents emphasized the immediate confidence boost and alignment with market momentum .

The proposal outlines a structured implementation timeline, with a voting period scheduled for August 25, 2025, and a revised version incorporating community feedback. The plan includes a mid-range buffer zone ($50–$85 million) to smooth transitions between buyback modes, reducing abrupt market impacts. Notably, the program avoids token burns, retaining bought-back LDO in the treasury for future strategic use, such as contributor rewards or grants. This cyclical model aims to sustain treasury health while fostering ecosystem growth .

Lido’s governance model has evolved to address stakeholder concerns, with the NEST system and dynamic buyback program reflecting a balance between innovation and caution. The platform’s dual governance structure, recently approved, grants stETH holders veto power over contentious proposals, further decentralizing decision-making. This framework, combined with the proposed buyback mechanisms, underscores Lido’s commitment to aligning tokenholder interests with protocol sustainability. As the DeFi landscape continues to mature, Lido’s initiatives highlight the importance of adaptive governance in maintaining trust and value for participants .

[1] Lido: NEST proposals, a system designed to establish the … (https://www.panewslab.com/en/articles/a9344b8b-a04c-4a56-b10a-8f2fd28b51e2)

[2] Dynamic Buyback Program for LDO - Proposals - Lido Governance (https://research.lido.fi/t/dynamic-buyback-program-for-ldo/10494)

[3] Lido Proposes Development Of NEST Mechanism For LDO Buybacks (https://mpost.io/lido-proposes-development-of-nest-mechanism-for-ldo-buybacks/)

[8] Lido DAO votes to enable dual governance, giving stakers veto … (https://www.theblock.co/post/360212/lido-dao-votes-to-enable-dual-governance-giving-stakers-veto-power)