Lido DAO proposes to buy back $20 million worth of LDO to help support the price after a 95% drop

Lido DAO proposes to buy back LDO worth $20 million to support the price after a 95% drop

Sustained selling pressure has caused the governance tokens of many DeFi protocols to fall into a significantly thinner liquidity state, forcing decentralized autonomous organizations to seek more forceful intervention solutions in order to stabilize prices. Against this backdrop, Lido DAO is considering a large-scale buyback program to help LDO after the token has plunged as much as 95% from its peak.

Plan to use treasury funds for the buyback

Under the new proposal, Lido DAO could use treasury funds to buy back an amount of LDO worth up to $20 million. The goal of this move is to create additional demand for the market, improve trading liquidity, and to some extent ease the downward pressure weighing on the token.

Notably, the proposal also mentions the possibility of purchasing up to 10,000 stETH as part of the DAO’s asset management strategy. This indicates that Lido is looking to use treasury resources more flexibly to support the ecosystem and strengthen confidence among the LDO holders community.

DeFi token liquidity is becoming thinner

The most noteworthy aspect of this plan lies not only in the size of the buyback, but also in the way the DAO needs to execute transactions through centralized exchanges. This reflects the reality that liquidity for DeFi governance tokens has weakened considerably, making it more difficult to carry out large orders on the decentralized market.

When liquidity is thin, even a relatively small amount of trading can trigger significant price volatility. For LDO, this is even more concerning given that the token has experienced a prolonged deep decline, increasing pressure on investor sentiment and the community participating in governance.

Why Lido is choosing a buyback

Token buybacks are often seen as a direct way to reduce circulating supply or create real buying pressure in the market. In Lido’s case, it is also a signal that the DAO wants to be more proactive in protecting the long-term value of the governance token, rather than relying solely on broader market developments.

Beyond the psychological effect, a buyback program can also help Lido test the actual liquidity level of LDO across exchanges. If rolled out successfully, this move could become one of the important steps toward stabilizing the token’s market structure during a difficult period.

Impact on investors and the community

For investors, the buyback proposal may be viewed as a positive near-term signal. However, the real effectiveness will depend on the scale of deployment, the timing of execution, and the level of support from the DAO community. If the market remains weak, the impact of this program may only be supportive rather than creating a durable upward trend.

On the other hand, the fact that Lido has to resort to a large-scale buyback plan also reflects the increasingly clear pressure that governance tokens are facing in the current DeFi market. This is not only a story specific to LDO, but also shows that liquidity, valuation, and incentive mechanisms are becoming common challenges for many projects.

Next outlook

In the coming period, attention will focus on how the Lido DAO community responds to this proposal and whether the plan will be approved. If it receives broad consensus, the buyback program could become a short-term catalyst for the price of LDO. That said, in the long run, the token’s value will still depend on the health of the protocol, the level of real-world usage, and the market’s ability to maintain confidence.