Lido DAO has published an overview of NEST, short for Network Economic Support Tokenomics, a mechanism designed to connect protocol revenue with the value of the LDO token through onchain automation. Under the framework, when revenue from Lido’s staking business rises above a preset benchmark, part of the excess income will be swapped into LDO via CoW Swap, creating a recurring buyback flow. The stated goal is to give LDO holders a more direct way to share in the protocol’s growth.
According to the initial parameters released by Lido DAO, the NEST revenue benchmark is set at an annualized $40 million, or about $109,000 per day. Of revenue above that threshold, 50% will be allocated to LDO buybacks. The mechanism also includes a daily buyback cap of $50,000 and a rolling 365-day cap of $10 million. Buybacks are set to run daily through a permissionless onchain process.
At launch, NEST will begin in Treasury-only mode, with purchased LDO sent directly to the DAO treasury. Lido DAO said the system could later switch, through an onchain vote and if market conditions are suitable, to an LP mode in which half the funds would buy LDO and the other half would be converted into wstETH to provide liquidity on Curve.
Lido DAO has published an explanation of NEST, or Network Economic Support Tokenomics, a mechanism that links protocol revenue to the value of LDO through onchain automation and enables ongoing LDO buybacks.
The stated aim is to give LDO holders a more direct share in the gains from protocol growth. The mechanism is backed by surplus funds from the DAO treasury. Once revenue from Lido’s staking business moves above a preset benchmark, part of the excess revenue will be automatically swapped into LDO through CoW Swap.
Initial parameters set benchmark and caps
Under the initial parameters outlined by Lido DAO, the NEST revenue benchmark is set at an annualized $40 million, which the post said is about $109,000 per day. Of the revenue above that level, 50% will be used to buy back LDO.
- The daily buyback cap is $50,000.
- The cumulative cap over 365 days is $10 million.
- Buybacks will be executed every day.
- The process will run onchain without permission requirements.
Treasury-only mode at launch
In its initial phase, NEST will operate in Treasury-only mode. LDO purchased through the mechanism will be sent directly to the DAO treasury.
Lido DAO said the setup could later be shifted, through an onchain vote and if market conditions are suitable, to an LP mode. In that structure, half of the funds would be used to buy LDO, while the other half would be converted into wstETH and deployed to provide liquidity on Curve.
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