Lido DAO's Contingent Repurchase May Set New Benchmarks for DeFi Treasury Management

Lido DAO, recognized as one of the leading decentralized staking platforms, has put forward a $10 million automated buyback scheme for its

governance token, with the goal of boosting liquidity and supporting the token’s price stability. This plan, crafted by the Steakhouse Finance team within the DAO, sets up a conditional trigger: buybacks will only occur if Ethereum trades above $3,000 and Lido’s yearly revenue exceeds $40 million. The annual buyback limit is set at $10 million, ensuring that treasury assets are used only when market conditions are advantageous, according to a . The proposal is currently being discussed on Lido’s governance forum and, as mentioned in a , could be rolled out as soon as the first quarter of 2026.

Dubbed "Liquid Buybacks," this mechanism differs from conventional buybacks by channeling the repurchased LDO tokens into on-chain liquidity pools alongside wrapped staked

(wstETH). Managed through an Aragon Agent smart contract, this strategy is designed to strengthen LDO’s liquidity and decrease its circulating supply, but without permanently removing tokens from circulation, as . The liquidity pool will follow a v2-style model, with the DAO maintaining oversight via the Aragon Agent to guarantee both transparency and decentralized asset management, as outlined in a .

A key feature of the plan is its counter-cyclical approach: buybacks will be suspended during bearish markets to conserve treasury funds, only resuming when both Ethereum’s price and protocol income reach the set benchmarks, as explained in a

. This structure fits with Lido’s broader objective of reinforcing its tokenomics by strengthening the connection between staking services and governance. Experts suggest that this dual emphasis on liquidity and supply management could help Lido set a new standard for DeFi treasury operations, as noted by .

The execution of this program will utilize NEST, a decentralized trading platform, to carry out purchases in small batches of 350,000 LDO tokens, keeping each trade’s market impact below 2%. This incremental method helps manage both slippage and transaction costs, minimizing price fluctuations while maintaining efficiency, as highlighted in a

. Furthermore, half of the protocol’s revenue above $40 million will be allocated to buybacks, with the rest potentially funding other ecosystem projects, according to the .

Lido’s approach takes inspiration from MakerDAO’s Smart Burn Engine, but tailors the concept to its staking-focused environment. By pairing LDO with wstETH, the DAO reinvests in its own ecosystem, increasing token utility and decreasing dependence on centralized liquidity providers, as described in the

. This proposal also mirrors a broader movement among DeFi projects, such as Uniswap, to implement treasury-based token management, as reported by .

Community involvement is at the heart of this initiative. Lido’s decentralized governance structure enables token holders to discuss and vote on the proposal via Snapshot, with ongoing conversations about potential parameter tweaks and alternative liquidity solutions, as detailed in a

. Should the proposal pass, it could serve as a model for DAO-driven financial strategies, blending DeFi tokenomics with established treasury practices while upholding decentralized governance, according to the .