Lido DAO Eyes $20M Buyback to Stabilize LDO Token Value
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Lido DAO is exploring a significant move to counteract the steep decline in the value of its LDO token, which has experienced a staggering drop of 95.9% from its peak. Currently valued at $0.30, the token has seen its market capitalization fall to $255 million, despite the platform maintaining its status as a leader in Ethereum’s staking protocol with a commanding 23.2% share of the staked Ether market.
The organization recently proposed a $20 million buyback plan aiming to address what it describes as a substantial price dislocation. This proposal involves exchanging 10,000 Lido Staked Ether (stETH), amounting to the said $20 million, from the DAO’s treasury for LDO tokens. The aim is to rectify what the DAO considers an undervaluation of the LDO token.
According to Lido DAO, the current trading conditions for LDO are historically low when measured against the fundamentals of its underlying protocol. There is a notable disparity in the token’s value compared to Ether; the current ratio stands at 0.00016, which is about 63% lower than its two-year average.
With a significant token buyback like this one, there is hope that the market price of LDO could receive a much-needed boost. A suggestion for an automated buyback mechanism was previously made, but it has yet to be enacted. Observations from Lido DAO indicate that the deterioration in the token price does not align with any proportional decline in the performance of the protocol itself.
To carry out the buyback, Lido DAO is considering purchasing the stETH in smaller batches of 1,000 tokens, applying either limit orders or a dollar-cost averaging approach to mitigate potential market disruptions. Each proposed batch will require the approval of token holders, and results will be reported before proceeding with additional purchases.
Interestingly, Lido DAO’s revenue also experienced a decline of 23%, totaling $40.5 million for 2025. The drop is primarily attributed to a decrease in staking fees, which fell to $37.4 million. Nevertheless, Lido DAO asserts that the core principles of the protocol remain intact, highlighting a mere 20% fall in rewards during the broader market slump, while operational costs were reduced by 13% compared to the previous year. Notably, the take rate—the portion of staked Ether rewards retained by the protocol as fees—has increased from 5% to over 6.1%.
In summary, the proposed buyback of LDO tokens by Lido DAO reflects a strategic effort to enhance token stability and value amidst significant market fluctuations. The outcome of this initiative could have profound implications for both Lido DAO and the wider Ethereum staking landscape.
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