Lido DAO submitted a buyback proposal over the weekend, aiming to spend up to 10,000 stETH (approximately $20 million at current ether prices around $2,000) to repurchase its governance token LDO, which it describes as trading at a historically depressed valuation.
The challenge lies in liquidity. On-chain LDO depth within a ±2% range sits at just $90,000, according to the proposal from the Lido Ecosystem Operations team. A single batch of 1,000 stETH would blow through available liquidity multiple times. The protocol therefore must go off-chain to execute at scale.
The proposal authorizes the Lido Growth Committee to route trades through centralized exchanges including Binance, OKX, Bybit, Gate and Bitget, each offering over $100,000 in depth. The committee may also engage market-maker partners on behalf of the Lido Ecosystem Foundation.
Valuation gap: LDO down 95% while protocol fundamentals hold up
LDO hit an all-time low of $0.27 on March 7 and now trades near $0.30, per CoinGecko, with a market cap of roughly $258 million. The token is down more than 95% from its 2021 peak of $7.30. At current prices, the buyback could consume up to 65 million tokens, or about 8% of circulating supply.
The DAO argues a dislocation between token performance and protocol fundamentals. The LDO/ETH ratio sits near 0.00016, a 70% discount to levels held over most of the past two years. Yet net protocol rewards have dropped only about 20% over the same period, costs improved 13% year-over-year, and the effective take rate rose to 6.11% from 5%. Lido still commands roughly 23% of staked ether, the largest share per DefiLlama.
"This is not a routine fluctuation," the proposal states. "It represents one of the most significant dislocations between LDO's market price and its underlying protocol fundamentals in the token's history."
Execution plan: batches of 1,000 stETH, 3% slippage cap
Buybacks will proceed in 1,000 stETH batches, each requiring a separate Easy Track motion with a three-day objection period. The Growth Committee retains timing discretion to avoid signaling moves to the market, a necessary precaution given the public proposal. Slippage is capped at 3% below the reference price.