Lido DAO has put forward a proposal to allocate up to 10,000 stETH, equivalent to approximately $20 million, from its treasury to repurchase its LDO governance token. The organization states that LDO is currently trading at a historically depressed valuation, making a buyback an attractive use of treasury funds. The proposal frames the move as a response to what it describes as a significant disconnect between token price and protocol performance.
Because onchain liquidity for LDO is limited, the plan outlines a structured approach to executing the purchases. Batches of 1,000 stETH would be routed through centralized exchanges and market makers to avoid disrupting thin onchain markets. At current prices, the buyback could retire roughly 8% of the token’s circulating supply.
The proposal points to a 95% decline in LDO’s price from its historical peak as a central justification for the initiative. Despite this drop, Lido DAO argues that the protocol’s underlying fundamentals remain strong. The gap between token price and protocol health forms the core argument for intervention.
The buyback proposal also raises a broader question about the nature of governance token valuation within decentralized finance. Specifically, it highlights ongoing uncertainty over whether DeFi governance tokens will ever be priced based on protocol performance rather than speculative activity. This tension has been a recurring theme across the DeFi sector as many governance tokens have struggled to maintain value relative to the protocols they represent.
The outcome of the proposal will depend on the DAO’s governance process, through which token holders typically vote on treasury spending decisions. If approved, the structured buyback would proceed in stages using the centralized exchange and market maker routing outlined in the plan. The initiative could serve as a test case for how DeFi organizations respond to prolonged token underperformance.
Originally reported by CoinDesk.
