Points of Focus

• Lido DAO plans to deploy 10,000 stETH ($20M) to buy back LDO, citing a deep disconnect from protocol fundamentals.
• Thin on-chain liquidity forces off-chain execution through exchanges, with staged governance approvals.
• The move tests whether governance tokens can regain pricing power without direct cash flows.

On March 27, 2026, Lido DAO introduced a proposal to allocate up to 10,000 staked Ether (stETH), worth roughly $20 million, from its treasury to repurchase its governance token, LDO. The plan targets what the DAO describes as one of the largest gaps between token price and protocol performance in its history.

The proposal extends beyond Lido itself. It tests whether treasury-driven buybacks can correct valuation in a sector where governance tokens have lost pricing power despite stable usage and consistent fee generation.

Utilizing Market Opportunities: stETH / LDO Trade

A proposal to authorize the Lido Growth Committee to purchase LDO using up to 10,000 stETH from the Lido DAO treasury has been published on the Lido DAO forum.

More info here: https://t.co/DHkpYYhCbs

— Lido (@LidoFinance) March 27, 2026

Why Lido says LDO is trading below protocol fundamentals

LDO currently trades near $0.32, down about 95% from its $7.30 peak in August 2021, according to CoinGecko data. Over the same period, Lido has maintained its position as the largest liquid staking protocol on Ethereum, holding roughly 23% of all staked ETH, based on Dune Analytics and DefiLlama dashboards.

The proposal frames this gap as the core issue.

• The LDO/ETH ratio sits near 0.00016
• That level is about 63%–70% below its two-year median
• Protocol rewards declined around 20% during the same window
• Operating costs improved roughly 13% year over year
• Fee capture increased, with take rate rising above 6.1%

The proposal states that the scale of LDO’s decline isn’t matched by a similar deterioration in protocol performance. Usage and revenue declined, but not at the same scale as the token price.

Execution constraints expose limits in DeFi market structure

Turning that thesis into action isn’t straightforward.

On-chain liquidity for LDO remains thin, with roughly $90,000 of market depth within a ±2% price range, based on data cited in the proposal. A single large trade would move the market significantly.

To manage this, Lido plans to:

• Execute purchases in 1,000 stETH batches
• Use limit orders or dollar-cost averaging
• Route trades through centralized exchanges such as Binance, OKX, and Bybit
• Engage market makers to handle execution

Each batch requires separate governance approval and includes a reporting step before continuation.

The setup highlights a structural issue. Even one of Ethereum’s largest protocols can’t execute treasury-scale actions fully on-chain without distorting price. The reliance on centralized venues raises a practical question for you as a reader: how decentralized are these markets when critical operations still depend on off-chain liquidity?

How this differs from stablecoin depegs and other recovery strategies

The situation may look like a “dislocation,” but it isn’t comparable to a stablecoin depeg.

In a stablecoin event, such as the USDC deviation during the March 2023 banking crisis, the issue came from redemption pressure and collateral uncertainty. Price moved because the peg mechanism itself was under stress.

LDO has no peg.

• There is no redemption mechanism to defend
• No collateral mismatch driving forced selling
• The price reflects market demand for governance rights

The distinction changes the response. Stablecoins require restoring trust in backing. Lido is attempting to reduce supply to influence price.

Other DeFi projects have taken different paths. Some protocols have reduced emissions or introduced revenue-sharing mechanisms to strengthen token value. Lido’s proposal doesn’t change token utility. It uses treasury capital instead.

Can buybacks fix governance token valuation gaps?

At current prices, the proposed buyback could remove around 65 million LDO tokens, or roughly 8% of circulating supply. That is meaningful from a supply perspective.

The key question is whether it addresses the underlying issue.

Governance tokens often control protocol parameters and fee switches but don’t distribute direct cash flows. This limits how markets value them. Lido’s own data shows revenue declined 23% to about $40.5 million in 2025, even as efficiency improved.

Reducing supply may support price in the short term. It doesn’t change how value flows to token holders.

Lido 2025 Revenue Falls 23% to $40.5M as DAO Weighs LDO Buyback Plan

Lido’s 2025 financials show total revenue declined 23% year over year to $40.5 million, with net staking fee revenue at $37.4 million, driven by staking outflows and APR compression; the DAO is evaluating a… pic.twitter.com/3JbaAV4hhB

— Wu Blockchain (@WuBlockchain) March 24, 2026

Lido’s proposal does more than attempt a price correction. It exposes a deeper tension in DeFi. Protocol usage, revenue, and market leadership don’t automatically translate into token value.

The outcome of this buyback will offer a clear signal. It will show whether capital deployment alone can shift valuation, or if governance tokens need stronger economic linkage to sustain it.