The Lido DAO is mulling a proposed automated buyback mechanism for its LDO governance token, aiming to enhance token holder value and improve onchain liquidity.

The proposal, put forward by Lido’s key finance unit Steakhouse, said the system would automatically repurchase LDO tokens using protocol revenues amounting to around 10% of total staking rewards.

It would operate through an LDO/wstETH liquidity pool similar to Uniswap v2, and if voted in, could come into effect as early as Q1 2026. The liquidity pool and the buyback process would be managed by an Aragon Agent, a secure DAO governance tool.

This story is an excerpt from the Unchained Daily newsletter.

The buyback mechanism would activate only under favorable market conditions — specifically when ether’s price exceeds $3,000 and the DAO’s annualized revenue surpasses $40 million. However, the annual buyback budget would be capped at $10 million.

“The yearly cap is $10M and current revenue levels mean ~$4M of LDO bought per year,” noted DeFi researcher and Lido DAO delegate @DeFiIgnas on X.