Lido Finance has activated its NEST Automated LDO Buyback Mechanism on mainnet, formalizing a long-term tokenomics program aimed at reducing the gap between protocol revenue and the market value of its governance token, LDO.
The program, officially called Network Economic Support Tokenomics, begins with an annual revenue benchmark of $40 million, or roughly $109,000 per day. If Lido earns more than that baseline in a day, 50% of the excess income is directed to market purchases of LDO. Purchases are capped at $50,000 per day and $10 million per year.
The activation follows months of warnings from Lido DAO about the widening disconnect between protocol earnings and LDO’s price. LDO has lost more than 95% of its value since 2021. At the time of the rollout, the LDO-to-ETH ratio was about 0.00016, representing a roughly 70% decline from its average over the previous two years. Over that same period, Lido’s net rewards fell by only about 20%, while costs dropped 13% and its fee rate increased from 5% to 6.11%.
Lido remains the largest holder of staked ether at approximately 23%. DefiLlama data cited in the announcement puts its total value locked near $17.8 billion, against a market capitalization of roughly $252 million. Annualized fees are around $693 million, with annualized revenue near $38 million.
Because on-chain LDO liquidity is thin, with only about $90,000 available within 2% of the current price, the program will execute buybacks through centralized venues including Binance, OKX, Bybit, Gate, and Bitget, as well as on-chain routes such as CoW Swap, 1inch, and Uniswap. Purchases will be made in 1,000 stETH batches, each requiring a separate Easy Track governance motion, a three-day objection window, and a slippage cap of 3% below the reference price.
The market response has been markedly positive, with reports indicating LDO rallied by roughly 30% in a month, resisting a broader DeFi downturn. Community engagement around the mainnet activation has also been strong, suggesting traders and stakeholders are closely monitoring how the automated buyback affects LDO liquidity and staking incentives.
