Lido details NEST automated buyback program as LDO sits near record lows

Lido DAO has released a detailed overview of NEST, the automated program it is building to buy back its own LDO governance token. 

The program is a direct response to LDO’s token, which has lost more than 95% of its value since 2021. 

What is Lido’s NEST? 

The Network Economic Support Tokenomics (NEST) program is Lido DAO’s long-term solution to the growing distance between what the protocol earns and what its token is worth, which it has been warning about for months. 

Cryptopolitan reported that NEST is meant to run as an automated mechanism. It’s completely separate from the one-off proposal the DAO put forward in March to spend treasury funds directly on LDO.

An annual revenue benchmark of $40 million (about $109,000 per day) has already been set by the company. If the protocol earns more than this baseline in a day, 50% of that extra income is sent to the NEST program to buy LDO. 

However, the program can only buy $50,000 worth of LDO per day, with a total annual cap of $10 million.

Cryptopolitan reported that the previous system proposed by Lido’s Growth Committee would use up to 10,000 stETH from the DAO treasury, worth roughly $20 million at ether prices near $2,000, to accumulate LDO.

The LDO-to-ETH price ratio was about 0.00016, representing a 70% decline from where it traded for most of the previous two years. During that same period, the protocol’s net rewards had only dropped about 20%. The DAO also said its costs went down by 13% compared to the year before, and its fee rate increased to 6.11% from 5%.

Lido holds the largest share of staked ether at around 23%. DefiLlama data also lists Lido’s total value locked near $17.8 billion against a market capitalization of roughly $252 million. Its annualized fees are around $693 million, and the annualized revenue is near $38 million. 

No liquidity on decentralized exchanges 

There is barely enough on-chain liquidity to execute the plan. Only about $90,000 worth of LDO is available to buy within 2% of the current price. This means a single batch purchase of 1,000 stETH (worth roughly $2 million) would use up all available liquidity several times over, causing the price to spike sharply.

To get around that, the proposal authorized buying LDO through centralized venues including Binance, OKX, Bybit, Gate, and Bitget, each offering more than $100,000 in depth, alongside on-chain routes such as CoW Swap, 1inch, and Uniswap. The purchases are made in 1,000 stETH batches, each requiring its own governance step (an “Easy Track” motion) with a three-day objection window and a slippage cap of 3% below the reference price. 

The market reacted positively to the buyback scheme, with reports indicating that LDO rallied by roughly 30% in a month where it resisted a broader downturn in the DeFi market.

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