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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.
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