Lido DAO’s $20M Buyback Plan to Revive LDO After 95% Crash

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Lido DAO proposes $20 million LDO buyback to boost price after 95% slideMarkets

What to know:

  • Lido DAO proposed spending up to 10,000 stETH (about $20 million) from its treasury to buy back its LDO governance token, which it says is trading at a historically depressed valuation.
  • Because onchain liquidity for LDO is thin, the plan would route batches of 1,000 stETH through centralized exchanges and market makers, potentially retiring about 8% of the circulating supply at current prices.
  • The proposal argues that LDO’s 95% price decline from its peak contrasts sharply with Lido’s strong fundamentals, highlighting a broader question of whether DeFi governance tokens will ever be valued on protocol performance rather than speculation.

Lido DAO is suggesting using up to 10,000 stETH – around $20 million worth at current prices – to purchase its own governance token. They believe the token is currently undervalued and represents a good buying opportunity.

The problem is where to spend it.

Currently, there’s around $90,000 worth of LDO tokens available for immediate trading on the blockchain. According to a recent proposal from the Lido team, a trade of this size could cause the price of LDO to fluctuate by about 2%.

Trying to buy a large amount of stETH (1,000 units) directly on the Ethereum blockchain would quickly exhaust all available funds. Because of this, the leading stETH platform needs to handle large purchases outside of the blockchain to avoid disrupting the market.

This proposal allows the Lido Growth Committee to execute trades on major centralized exchanges like Binance, OKX, Bybit, Gate, and Bitget, all of which have sufficient trading volume (over $100,000). The committee is also authorized to work with specialized trading firms, called market makers, to help ensure trades are completed efficiently on behalf of the Lido Ecosystem Foundation.

Valuing governance

According to CoinGecko, LDO recently reached its lowest price ever at $0.27 on March 7th and is now trading around $0.30. Its current market value is approximately $258 million.

The token’s value has dropped significantly, losing over 95% of its value since reaching a high of $7.30 in 2021. If the proposed buyback goes through, it would involve around 65 million tokens, which represents about 8% of all tokens currently in circulation.

The DAO argues that the price of its token doesn’t reflect the underlying strength of the protocol. Currently, one LDO token is worth about 0.00016 ETH, which is 70% lower than its typical value over the last two years.

Unlike some other areas, rewards from network protocols have only decreased by about 20% recently. At the same time, costs have gone down 13% compared to last year, and the protocol is now keeping 6.11% of the staked assets, up from 5%. Lido remains the leader in ether staking, currently holding around 23% of all staked ether, according to DefiLlama.

According to the proposal, this price change isn’t typical. It’s one of the biggest differences ever seen between the market price of LDO and the actual value of the technology behind it.

The process will happen in stages, with 1,000 stETH processed in each batch. Each batch needs a separate approval through a standard process called an Easy Track motion, which includes a three-day period for objections. The Growth Committee will decide when to start and how quickly to proceed to avoid revealing their strategy to the market, as the plan is publicly available. The price difference between the expected price and the actual execution price will be limited to a maximum of 3%.

As I’ve been analyzing this proposal, it’s really highlighting a bigger issue with DeFi governance tokens in general. While LDO’s 95% drop from its highest price is dramatic, it’s unfortunately pretty common within this type of asset. It’s striking that a leading protocol, consistently earning fees and managing billions in total value locked, is only valued at $258 million. The market seems to have fundamentally re-evaluated what these governance tokens are worth, especially when they control revenue distribution but don’t actually distribute any of those earnings to token holders.

Lido is responding to the recent price drop by seeing it as a chance to buy more tokens. However, whether this strategy will be successful hinges on whether investors ultimately value governance tokens based on their underlying merits, rather than just speculation.

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2026-03-30 16:38