This is a fundamentally flawed approach. You can’t and shouldn’t define a parameter based on ETH’s USD valuation. What’s actually happening here is simply converting ETH into LDO, so the DAO isn’t really spending anything; it’s just reallocating its assets.
That said, the ETH/LDO market cap ratio or more broadly, the ETH/altcoin ratio is currently at all-time highs. If the ETH price threshold of $3,000 is intended to time this conversion, the DAO risks missing an opportunity to convert overvalued ETH into undervalued LDO.
I see a huge misconception about buybacks in crypto.
(edit: and I also think that the excess LDO tokens held in the DAO Treasury should be burned to avoid inflating the asset, since the DAO can now maintain surplus reserves in either ETH or LDO. Spending genesis-allocated LDO tokens would be purely inflationary, while spending LDO acquired through buybacks would only create volatility without resulting in net inflation over time.)
Our starting point is that the LDO in Aragon treasury does not count as an asset on the balance sheet and LDO only comes into existence when in circulation.
From this perspective, burning the LDO in treasury is meaningless and would not change, create or destroy any value.
A better model in general, in our view, would be one where there are indeed 0 ‘preminted’ tokens at all times and the DAO retains the discretion to mint or burn new tokens depending on the need. There may be a time when issuing new tokens would be value accretive to the DAO - if the opportunity set of new grants had the perspective to return more than the dilution from issuing new LDO for example.
This could be an interesting new proposal to change the model for LDO balances and avoid the confusion of having a balance in Aragon - burn the treasury tokens, sure, but start generating new ones when needed.
It’s a good point and the valuation threshold could be done on ETH/LDO. A mitigant could be that the broader correlation between the two assets in USD respectively is high enough that using ETH is close enough. The rationale for ETH alone is to base the threshold on the transaction currency DAO fees are generated in where we can at least substantiate a threshold on the basis of expectation for future grant requests. Rather than relative valuation for which we wouldn’t have a good answer for thresholds other than ‘historically it has been something else’.
First of all, thanks for the detailed reply. I agree with your points, but:
Actually, it does have some benefits. While the DAO would still retain the authority to spend genesis-allocated LDO tokens, this would add a layer of protection against token dilution. More importantly, it would strengthen the DAO’s defense against potential governance capture and increase the fiscal discipline within the organization.
I think there’s a conflict here. If the correlation between the two assets were high enough, basing the threshold on it wouldn’t be an issue. But I don’t think that’s the case. The ETH/LDO market cap ratio has shown significant volatility; it has increased by about 600% over the last two years.
As easily as the DAO can burn LDO, the DAO can always vote to mint new tokens regardless. So the number of LDO in the treasury is illusory - burning it would not change the ability to generate new tokens through an Aragon vote.
Fair enough - though going back to how to select this threshold, we felt it was more substantiated to set one on the basis of revenue/surplus. Of course, reasonable views may differ.
Transparency notice: This proposal is planned to be prepared for a Snapshot vote in Q1 2026 and will be accompanied by a technical specification and a projected implementation timeline, targeting the February voting slot. The technical team has completed development of NEST v1. The next step is to document and justify the technical design and scope of this proposal to support an informed governance decision.
I don’t get it, why the complexity? Why are revenue-share proposals rarely simple. Here an example of a very simple one:
50% to 100% of all revenue get’s directly distributed to stLDO as ETH. Incentivise stLDO stake stickiness by implementing a 90-day weight-accrual function: from day 90 onwards, a user’s stake get’s counted x2.5 times when determining his rewards. make unstaking 7 to 14 days in order to mitigate mid-rangegovernance attacks.
I agree with comments above that the main focus should be growth but connecting token to protocol is essential. Would prefer getting StEth on my staked ldo rather than buyback
It looks complex because it solves for conflicting constraints. The DAO members are split: some want buybacks or revshare, others don’t want buybacks at all right now. The proposal is a compromise that returns value without damaging the existing economics or safety buffer.
Direct revenue sharing only looks simple. In practice, it may reduce operational resilience during downturns. And LDO staking as an option gives preferential treatment to a subset of holders. Buybacks avoid that; they treat all holders equally, and come with better tax and regulatory properties in some jurisdictions.
Yes, it is better to airdrop stETH from streasury to LDO holders via staking, no need to dump any ETH buy back any LDO which is act like price manipulation. Let people decide if they want to dump earned ETH for LDO or not.
So holders can earn stETH by stake LDO, it means a lot of LDO will be withdraw from exchange for staking. It will be nice if we use our custom vault V3 to make it works.
V3 platform active users → Up
LDO holders benefit → Up
Decentralization → Up
What’s else up I don’t know right now, who can list them all?
Instead of executing LDO buybacks using ETH or stETH treasury — which may be perceived as price manipulation — I propose a protocol-native alternative:
Enable LDO staking via Lido V3 custom vaults, where LDO holders earn stETH rewards funded from protocol revenue.
This approach allows the market — not the DAO — to decide whether earned stETH should be held, restaked, or swapped into LDO.
Key benefits:
1/ No direct market intervention or buyback execution
2/ Increased LDO utility without inflation
3/ Natural reduction of liquid LDO supply via voluntary staking
4/ Strong incentive alignment for long-term governance participants
5/ Direct adoption driver for Lido V3 infrastructure
6/ Improved decentralization and regulatory optics
This mechanism prioritizes sustainability and neutrality while still delivering tangible value to LDO holders.
And that’s a good thing. Revenue is the carrot that can be used to incentivise desired behaviour. In Lido’s case it would be getting $LDO out of CEXs and into the governance module.
And how long are you going to discuss this? You haven’t implemented staking for six months. While the entire market is adjusting to market realities, you’re still debating something. Everyone on Twitter is already saying LDO is useless.
I agree with the commenter above, implement LDO staking.
If you do this assuming Ethereum is above $3,000, etc., then when will the buyback actually start? In 100 years?
What doesn’t makes sense to me is that a lot of people don’t see the purpose in burning LDO if the DAO can vote to mint new tokens, so why are we proposing to buy back LDO then ?
We should have a system where the DAO grow an ETH and stablecoin/bonds treasury, and distribute some of the revenue (20-50%) to LDO stakers.
What gives value to LDO would be the revenue stream from Lido products, but also the value of the treasury growing. The treasury would allow to develop and fund expansion, new products etc…
Until we fix the tokenomics we should accept that LDO tokens have no real economic value because they are merely votes, not dividend-paying shares. They could be called worthless papers, with profits coming from later buyers paying earlier buyers. So don’t expect too much at the moment.
Currently Lido generate about 100M$ annually revenue at FDV 300M$, cir is 850M token
That means each token generate about 0.1$ → Current price is 0.3$ → P/E is 3
P/E ratio of 3 is unreal for any Market Leader
So I believe whenever LDO holders got revenue sharing, the P/E will be recalculated by market
