Lido DAO Plans $20 Million Buyback to Rescue Undervalued LDO Token in Crypto Market

Lido’s decentralized autonomous organization (DAO) is exploring a bold move: a one-off $20 million buyback of its governance token, LDO, to address what it calls a “historically depressed” price relative to Ether (ETH).

The proposal, submitted last Friday, aims to swap 10,000 Lido Staked Ether (stETH) from the DAO treasury for LDO, arguing that the token’s market value is far below its underlying fundamentals.

“This is not a routine fluctuation,” the DAO said.

“It represents one of the most significant dislocations between LDO’s market price and its underlying protocol fundamentals in the token’s history.”

LDO’s Price Struggles and Market Context

LDO has experienced a massive drop from its all-time high of $7.30 in August 2021 to just $0.30 today—a decline of nearly 96%.

Despite this, Lido continues to dominate the Ethereum liquid staking sector, holding a 23.2% share of staked Ether, according to Dune Analytics.

The DAO emphasized that LDO’s steep discount to ETH—trading at a ratio of 0.00016, roughly 63% below its two-year median—does not reflect any proportional deterioration in protocol performance.

In other words, the fundamentals remain strong even as the market punishes the token.

How the Buyback Would Work

Lido DAO’s proposal is to buy stETH in batches, with each batch of 1,000 stETH exchanged for LDO.

The plan includes using limit orders or a dollar-cost averaging strategy to reduce market volatility.

Importantly, each batch requires approval from tokenholders, and the process can be paused at any time.

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Results from each round must be reported before moving to the next batch, ensuring transparency and accountability.

Financial Health Amid Market Pressures

The buyback proposal comes as Lido’s revenue fell 23% to $40.5 million in 2025, primarily due to staking fees dropping 23% to $37.4 million.

Despite this, the DAO points to several positive signs:

• Staking rewards only declined 20% amid the broader market downturn
• Operational costs fell 13% compared to 2024
• Lido’s take rate increased from 5% to 6.1%, improving fee capture

The DAO argues that these metrics demonstrate strong underlying fundamentals, reinforcing the case for a buyback to correct the token’s undervaluation.

Market Implications of a Buyback

A successful $20 million buyback could significantly boost LDO’s price, potentially reversing some of the steep losses seen over the past years.

It could also increase confidence in the token among investors, signaling that the DAO is proactive in defending the protocol’s market value.

However, the move is not without risks.

Sudden buybacks can create short-term volatility, and any missteps in execution could fail to achieve the intended market stabilization.

Impact and Consequences

If approved, this buyback could reset LDO’s price closer to its intrinsic value and strengthen investor confidence.

It could also set a precedent for other DAOs to intervene directly in token markets, raising questions about market manipulation versus responsible governance.

Additionally, Lido’s action might attract scrutiny from regulators monitoring decentralized finance protocols, especially given the increasing attention on token buybacks and price stabilization strategies.

What’s Next?

Tokenholders will have the final say on whether the buyback proceeds.

Each batch’s execution and reporting will be carefully monitored, and the community will likely debate the merits and risks of such a large-scale intervention.

Meanwhile, market observers will watch LDO’s price movements closely to see if this initiative effectively narrows the dislocation between LDO and ETH.

Summary

Lido DAO’s proposed $20 million buyback of LDO represents a proactive attempt to correct a major undervaluation relative to ETH.

With the token trading near historic lows despite strong protocol fundamentals, the plan aims to boost price, enhance investor confidence, and demonstrate governance action in a volatile market.

Bulleted Takeaways

• Lido DAO proposes a $20 million one-off buyback of LDO to address price dislocation
• Proposal involves swapping 10,000 stETH from the treasury in smaller batches of 1,000
• LDO trades at $0.30, down nearly 96% from its $7.30 all-time high
• Protocol holds 23.2% of Ethereum staked Ether, maintaining market dominance
• Each buyback batch requires tokenholder approval and must be reported before continuing
• Lido’s revenue fell 23% in 2025, but operational improvements and higher take rates show strong fundamentals
• The buyback could boost LDO’s price and investor confidence but carries execution risks