I noticed an interesting point in the history of Lido DAO. The protocol proposes to spend about 10,000 stETH from the treasury to buy back its own governance token LDO, which, in their opinion, is trading at historically undervalued levels. Currently, this is approximately $20 million at an Ethereum price of around $2,340.

It sounds simple, but there’s a nuance. The problem is that the liquidity of LDO on the blockchain is quite small — only about $90,000 with a plus-minus 2% depth. This means that one large trade can significantly impact the price. Therefore, the DAO plans to split the purchases into batches of 1,000 stETH and conduct them through market makers and large centralized exchanges. With this approach, they can remove about 8% of the circulating supply without sharp price jumps.

And here’s why this is even necessary. LDO fell 95% from its peak in 2021, when it was worth $7.30. It is now trading around $0.43. The market capitalization has dropped to $368 million. But here’s the paradox — the fundamentals of the protocol are not catastrophic at all. Lido still holds about 23% of all staked ETH, protocol fees have increased by 13% year-over-year, and the effective rate has risen from 5% to 6.11%. The LDO to ETH ratio has fallen by 70% — this is truly one of the most significant discrepancies between the market price of the token and its actual metrics in history.

This raises a deeper question. Governance tokens in DeFi are constantly overvalued by markets. A protocol dominating its sector, generating stable fees, holding billions in TVL, has its governance token traded as a speculative asset rather than as a tool with real value. Lido’s response is to see this dislocation as an opportunity for profitable buying.

Each purchase batch will require a separate vote via Easy Track — a mechanism for routine operations with a three-day objection period. The development committee retains the right to choose timing and pace so as not to signal specific steps to the market. The sliding deviation is limited to 3% below the reference price.

The question is whether this will work. It depends on whether the market will ever decide that governance tokens should be traded based on the protocol’s fundamentals rather than just on waves of speculation.