Lido DAO plans $20M buyback as LDO jumps 5%

Highlights

Lido DAO plans $20 million LDO token buyback
LDO rises 5% amid undervaluation and liquidity concerns
DeFi governance tokens face growing repricing debate

Buyback at depressed valuations

According to CoinDesk, Lido DAO has proposed allocating up to 10,000 stETH, worth $20 million, from its treasury to repurchase its governance token LDO, which is currently trading below $0.32—down 98% from its all-time high reached in November 2021. On March 8, LDO fell to $0.27, marking a new all-time low.

LDO price dynamics for the month. Source: CoinMarketCap

The proposal by Lido Ecosystem Operations notes that on-chain liquidity depth for LDO is around $90,000 with a ±2% deviation, meaning a transaction of this size could move the price by up to 2%.

To mitigate this, Lido DAO plans to execute the buyback via centralized exchanges, including Binance, OKX, Bybit, Gate, and Bitget, each offering market depth exceeding $100,000.

The proposal also allows the committee to engage market-making partners on behalf of the Lido Ecosystem Fund to facilitate execution.

Trades will be conducted in tranches of 1,000 stETH, each requiring separate approval via Easy Track—a governance mechanism for routine or pre-approved operations—with a three-day objection window.

The development committee retains discretion over timing and pacing to avoid signaling the market, a necessary precaution given the public nature of the proposal. Slippage is capped at 3% below the reference price.

Governance tokens face repricing debate

The proposal argues that LDO’s 95% decline from its peak sharply contrasts with Lido’s strong fundamentals, raising broader questions about whether DeFi governance tokens will ever be valued based on protocol performance rather than speculation.

This argument is based on the disconnect between token price action and protocol fundamentals. The LDO/ETH ratio stands at approximately 0.00016, about 70% below levels seen over most of the past two years.

While net protocol revenue declined by only about 20% over the same period, costs fell 13% year-over-year, and the effective protocol fee increased from 5% to 6.11%. According to DefiLlama, Lido still holds the largest share of staked ETH at around 23%.

“This is not a normal fluctuation. It represents one of the most significant divergences between LDO’s market price and the protocol’s underlying fundamentals in its history,” the proposal states.

The initiative goes beyond short-term price support. The buyback signals that leading DeFi protocols may take a more active role in managing tokenomics and deploying treasury assets to correct market mispricing, potentially setting a new standard for DAO capital management.

Moreover, Lido’s case could accelerate a broader repricing of governance tokens across DeFi. If markets begin to factor in real cash flows, market share, and protocol efficiency, it may lead to a more mature valuation framework for digital assets.

In the long term, such initiatives could strengthen institutional confidence in DeFi and support the sector’s transition from a speculative phase to a fundamentally driven market.

As we wrote, Lido price jumps as token buying pressure builds

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