A significant capital allocation initiative has emerged within the Lido Finance (LDO) ecosystem. The Growth Committee, operating within the Lido DAO, has proposed a new scheme to accumulate LDO tokens using a portion of the stETH assets held in the DAO treasury.
According to the proposal, assuming favorable market conditions persist, LDO tokens will be purchased using a maximum of 10,000 stETH, and this process will be managed through the Lido Ecosystem Foundation. The purchased LDO tokens will be transferred back to the treasury, and a detailed implementation report will be shared at the end of the process.
The primary reason behind the proposal is that LDO’s price against ETH is trading at significantly lower levels compared to historical averages. The current LDO/ETH ratio is estimated at around 0.00016, representing a 63% decrease compared to the average of the last two years and a 70% decrease compared to the previous level of approximately 0.0005. It is argued that this is not merely a short-term fluctuation but a significant mismatch between the token price and the protocol’s fundamental performance.
According to the committee, this price deviation is not due to a deterioration in protocol performance. While net protocol rewards decreased by approximately 20% during the same period, the decline in the LDO/ETH ratio reached 50%. However, it is stated that costs improved by 13% year-on-year and the protocol’s revenue share increased from 5% to 6.11%, enhancing its revenue capture capacity. Lido’s continued position as the leading liquid staking protocol in terms of total value locked (TVL) and its stable revenue generation also support this view.
*This is not investment advice.
