In a latest proposal, Lido launched an automatic buyback mechanism. It would use LDO and wstETH liquidity to type a Uniswap v2-style liquidity pool. It is going to be managed by the Aragon Agent. If authorized, the plan might launch as early as Q1 2026.
The objective is straightforward however highly effective: take away LDO tokens from circulation via automated buybacks whereas bettering on-chain liquidity. This could make LDO extra helpful throughout decentralized finance (DeFi) platforms, giving token holders extra confidence and long-term worth.
How the Buyback Mechanism Works
In conventional finance, firms purchase again their very own inventory to scale back provide and improve worth. Lido’s proposal brings the same thought on-chain. As a substitute of buying shares, the DAO would purchase its personal LDO tokens utilizing income generated from staking rewards. The tokens would then be paired with wrapped staked ETH (wstETH) in a liquidity pool, bettering buying and selling depth whereas progressively eradicating LDO from the open market.
The system prompts solely beneath sure circumstances. For example, buybacks would happen when ETH trades above $3,000 and Lido’s annual income exceeds $40 million. This system would use as much as 50% of staking inflows above that threshold, with a restrict of $10 million per 12 months to stop extreme spending.
A proposal to implement an automatic LDO buyback mechanism is now reside on the Lido DAO Discussion board.
Opinions concerning mechanism, proposed parameters and extra are welcome.https://t.co/Hve7cS405J
— Lido (@LidoFinance) November 11, 2025
This setup is anti-cyclical, that means it responds to market efficiency. When ETH costs and revenues rise, buybacks improve, supporting token worth. In bear markets, the system slows down or pauses, preserving DAO funds. This method mirrors treasury methods seen in protocols like MakerDAO’s Sensible Burn Engine, which additionally automates buybacks primarily based on market circumstances.
Extra About Lido
Lido DAO has unveiled stRATEGY, a brand new product that makes incomes DeFi rewards simpler and extra automated. Constructed on Mellow Protocol’s Core Vaults, stRATEGY lets customers deposit ETH, WETH, or wstETH simply as soon as and robotically distributes these funds throughout trusted platforms like Aave, Ethena, and Uniswap. The system regularly rebalances to maximise rewards, simplifying what was once a posh course of.
Introducing stRATEGY
Curated DeFi rewards centered round stETH
Aave, Ethena, Uniswap & extra
— Lido (@LidoFinance) November 6, 2025
In trade, customers obtain strETH, a token that accrues each DeFi yields and Mellow factors for added incentives. At any time, strETH may be swapped again into wstETH, giving customers full flexibility. With stRATEGY, Lido DAO goals to make DeFi participation extra accessible whereas specializing in dependable, battle-tested integrations that optimize returns.
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