Decentralized autonomous organization Lido is considering a one-time $20 million buyout of its governance token to address what it calls price churn, which the DAO says remains at “historically depressed levels” relative to Ether.
Proposal, complicated on Friday is seeking permission to swap 10,000 Lido Staked Ether (stETH) tokens, currently worth $20 million, from the DAO treasury for Lido DAO (LDO), arguing that LDO is undervalued.
“This is not a routine fluctuation. It represents one of the most significant dislocations between the LDO market price and the protocol’s fundamental fundamentals in the token’s history.”
A token redemption of this size could impact the token’s price, which has dropped approximately 96% from its all-time high. In November, member Lido DAO proposed an automatic redemption mechanism for LDO to improve the token’s price. However, this proposal was not implemented.
Lido DAO noted that LDO is trading at a significant discount to Ether (ETH) at a ratio of 0.00016, approximately 63% below the two-year median.
This is despite the fact that, according to Dune Analytics, the protocol ranks first in the Ethereum liquid stake market, with a share of 23.2% of staked Ether data. In previous years, the protocol’s dominance was even signaled as a risk of network centralization.
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LDO is currently trading at $0.30, down 95.9% from the high of $7.30 set in August 2021, According to to CoinGecko data. LDO’s market capitalization of $255 million makes it the 141st largest token by value at the time of writing.
“This postponement is not justified by a proportionate deterioration in the performance of the protocol,” Lido DAO said.
Lido DAO proposes purchasing sETH in batches
Lido DAO offered to purchase up to 10,000 stETH in smaller lots of 1,000 pieces to buy LDO.
Lido DAO said it will exploit limit orders or adopt a dollar-cost averaging strategy to avoid market volatility.
However, each batch would require approval and could be retained by token holders.
After each batch, the results will also need to be reported before continuing.
The proposal also comes amid a decline in Lido’s revenues 23% to 40.5 million in 2025, mainly due to a 23% drop in staking fees to $37.4 million.
The Lido DAO argued that the protocol’s fundamentals remain mighty, noting that rewards dropped by just 20% amid the broader market downturn, costs increased by 13% in 2025 compared to 2024, and Lido’s collection rate increased from 5% to over 6.1%, which improved fee collection.
The take rate refers to the percentage of staked ETH rewards that the protocol retains as fees.
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