The Lido DAO is considering a $20 million token buyback to support its token, LDO, which has traded near its all-time low this month. The proposal from the Lido Ecosystem Foundation would use up to 10,000 staked Ether tokens to purchase LDO, marking a one-time initiative separate from a more complex, automated buyback program debated last November. The token has rallied approximately 18% since the proposal was introduced, as community members debate the fundamental value of governance tokens.
For the second time in five months, Lido DAO is debating a buyback proposal. The latest is a one-time initiative addressing brutal price action for its token, LDO, which has touched $0.27 this month.
Despite being the second-largest protocol on Ethereum with nearly $19 billion in user deposits, its governance token has performed poorly. The protocol generated $40 million in revenue last year, with half going to the DAO treasury run by tokenholders.
One community member stated in a forum, “Until we fix the tokenomics we should accept that LDO tokens have no real economic value because they are merely votes, not dividend-paying shares.” The member added they “could be called worthless papers, with profits coming from later buyers paying earlier buyers.”
The Lido Ecosystem Foundation proposed using up to 10,000 staked Ether, worth about $20 million, to purchase LDO. It cited a significant dislocation between LDO’s market price and its underlying protocol fundamentals.
The Foundation clarified this was not a replacement for November’s automated program, which would only trigger under specific conditions like Ether above $3,000. “The current proposal is an one-off initiative to utilize market opportunities,” it noted.
DAO members have voiced support, and LDO rallied about 18% to $0.32 following the proposal. One member wrote, “I’m sure that LDO is really undervalued right now, it makes sense for the DAO to use some of its idle [staked Ether] instead of just letting it sit there doing nothing.” The debate now centers on whether LDO is truly undervalued or if the market is questioning the value of governance tokens.
