Lido's LDO Repurchase Strategy Ignites Discussion: Will It Enhance Value or Increase Market Fluctuations?

Lido Finance has introduced a proposal for a modular framework named NEST, aimed at enabling potential

token repurchases, representing a notable advancement in the DeFi platform’s governance approach. The NEST system, which is currently up for a vote and has unanimous support as of September 29, 2025, is intended to swap stETH from the treasury for LDO using a technical infrastructure. Should the proposal pass, the initial pilot of the system is scheduled for December 2025. The plan highlights a staged rollout, with research and design work starting immediately after approval. However, activating the system will require a separate on-chain vote, reinforcing Lido’s decentralized governance principles.

The NEST framework functions as a modular system that utilizes stETH to acquire LDO, with the purchased tokens being sent back to the Lido DAO treasury. This involves placing periodic STONKS Cowswap orders, each with a configurable maximum size to limit slippage, and distributing rewards to the addresses that execute these orders. The mechanism features a flexible timelock and escrow process for managing stETH deposits, allowing the system to adapt to market changes. Key parameters, such as how often orders are placed (at least every 7,000 blocks) and slippage limits, can be modified through Aragon DAO voting, highlighting the community-led governance model.

Alongside the NEST proposal, the Lido DAO also discussed a separate dynamic buyback initiative for LDO. This program intends to use a $145 million treasury surplus, dedicating 70% of liquid assets to regular buybacks and reserving 30% for operational and strategic needs. The strategy is designed to increase token value by reducing circulating supply and incentivizing long-term contributors. Nonetheless, community discussions raised issues about possible volatility from threshold-based triggers and the necessity for transparent treasury management. Some critics warned that buybacks linked to treasury levels could disconnect LDO’s price from Lido’s core staking performance, while supporters pointed to the immediate boost in confidence and alignment with market trends.

The proposal provides a detailed rollout schedule, with voting set for August 25, 2025, and a revised version reflecting community input. The plan incorporates a buffer range ($50–$85 million) to ease transitions between buyback phases, helping to avoid sudden market disruptions. Importantly, the program does not burn tokens; instead, repurchased LDO remains in the treasury for future uses such as contributor incentives or grants. This cyclical approach is intended to maintain treasury stability while supporting ecosystem development.

Lido’s governance has evolved to better address stakeholder input, with the NEST system and dynamic buyback plan balancing innovation and prudence. The recently adopted dual governance structure gives stETH holders veto authority over contentious proposals, further decentralizing decision-making. Together with the proposed buyback systems, this framework demonstrates Lido’s dedication to aligning tokenholder interests with the protocol’s long-term sustainability. As DeFi continues to evolve, Lido’s efforts underscore the need for flexible governance to uphold trust and value for its community.