Lido DAO Weighs $20M Buyback as LDO Trades Near Historic Lows

Key Highlights

• Lido DAO is voting on a $20 million LDO buyback proposal
• The plan would use 10,000 stETH from the treasury to repurchase LDO tokens
• LDO has fallen roughly 96% from its all-time high and remains near historic lows
• Supporters argue the token is trading far below the protocol’s actual fundamentals
• The proposal has reignited debate around the long-term value of DAO governance tokens

A major governance debate is unfolding within Lido DAO, as the protocol considers deploying $20 million from its treasury to buy back its own governance token, LDO. The proposal arrives at a critical moment for the project, with the token hovering near historic lows despite Lido remaining one of the largest and most influential protocols in decentralized finance.

At the center of the proposal is a plan to swap up to 10,000 stETH—Lido’s liquid staking asset—for LDO on the open market. Rather than executing the buyback all at once, the DAO would carry out purchases gradually in smaller tranches, using methods such as limit orders or dollar-cost averaging to reduce market disruption.

The motivation behind the proposal is straightforward: many within the DAO believe LDO’s market price has become disconnected from the protocol’s underlying strength.

Despite remaining the dominant liquid staking platform on Ethereum, controlling roughly 23% of all staked ETH, LDO has continued to struggle. The token recently traded near $0.30, down approximately 96% from its all-time high above $7 reached during the previous crypto cycle.

According to the proposal, the token’s valuation relative to Ethereum itself has also collapsed. The LDO/ETH ratio currently sits around 63% below its two-year median, a gap supporters describe as one of the largest pricing dislocations in the token’s history.

This disconnect is particularly striking because the protocol itself remains operationally significant within Ethereum’s staking ecosystem. Lido continues to generate meaningful revenue from staking services, maintains billions in total value locked, and plays a central role in Ethereum’s liquid staking market.

However, the proposal also exposes a deeper issue affecting much of decentralized finance: the growing uncertainty around governance token economics.

Unlike traditional equities, governance tokens generally do not provide direct ownership rights or guaranteed cash flows. Their value is often tied primarily to voting power and ecosystem participation. As market conditions weakened across DeFi, many investors began questioning whether governance rights alone justify large token valuations.

That debate has become increasingly visible within the Lido community itself. Some DAO members argue the protocol’s fundamentals clearly support a higher valuation, while others believe the market is simply repricing governance tokens more realistically after years of speculative excess.

The buyback proposal therefore carries symbolic weight beyond its financial size. Supporters view it as a confidence signal—evidence that the DAO is willing to actively defend alignment between the token’s value and the protocol’s performance. Critics, however, warn that buybacks alone may not solve deeper structural questions around governance-token demand.

The mechanics of the proposal also reflect growing maturity in DAO treasury management. Rather than passively holding reserves, protocols are increasingly exploring strategies similar to traditional corporate finance, including buybacks, revenue-sharing models, and treasury optimization programs.

Still, risks remain.

Lido’s revenue declined in 2025 amid broader market weakness and increasing competition from centralized exchanges, ETH ETFs, and alternative staking platforms. Whale wallets have also reportedly sold tens of millions of LDO tokens in recent months, contributing to ongoing sell-side pressure.

This creates a difficult balancing act for the DAO. On one side, the buyback could stabilize sentiment and reinforce confidence in the ecosystem. On the other, it raises questions about whether governance tokens can sustain long-term value without clearer economic rights attached to them.

Ultimately, the proposal represents more than just a treasury vote. It highlights a broader turning point for decentralized finance itself.

As the DeFi sector matures, protocols are increasingly being forced to answer a difficult question: should governance tokens function primarily as community voting tools—or as financially productive assets tied directly to protocol performance?

How Lido DAO answers that question may shape not only the future of LDO, but the direction of DAO economics across the entire crypto industry.