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The Lido DAO community has proposed a new liquidity buyback mechanism that aims to reduce the LDO supply and increase the altcoin's utility.
According to the proposal, the LDO/wstETH pair would be structured as a liquidity provider position similar to Uniswap v2, with ownership held through the Aragon Agent. This would both facilitate automatic buybacks and deepen the liquidity pool, strengthening LDO's market functionality. If the proposal passes the community vote, the mechanism is expected to be operational in the first quarter of 2026.
The community notes that in a standard buyback model, LDO could be collected solely through NEST, but this offers limited throughput due to slippage and gas costs.
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Larger volumes of transactions generate higher price impact, while smaller transactions consume more gas. It's also been noted that LDO's on-chain and CEX liquidity may limit buybacks in the long term. Therefore, the proposed model aims to deepen the order book by creating a liquidity position and make the buyback mechanism more sustainable.
The new framework is designed to ensure that buybacks only operate during periods when DAO revenues and market conditions are favorable. Accordingly, buybacks will only be activated if the ETH price is above $3,000 and annual revenue exceeds $40 million. 50% of staking revenue above this limit will be allocated for buybacks.
Transactions will be planned so that their price impact doesn't exceed 2%, based on market liquidity, and the total buyback amount will be capped at $10 million over a 12-month period. The mechanism will automatically pause if the ETH price drops or revenue falls below the specified level.
*This is not investment advice.
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A Major Buyback Vote to Reduce the Token Supply in This Altcoin Will Be Held – Here Are the Details

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