Lido’s decentralized autonomous organization (DAO) is proposing a one-off $20 million buyback of its governance token, LDO, to address significant price dislocation. The DAO argues that LDO is undervalued, trading at a steep discount to Ether (ETH) at a ratio of 0.00016, approximately 63% below its two-year median. This buyback, involving the swap of 10,000 Lido Staked Ether (stETH) tokens, aims to stabilize the token’s price, which has plummeted roughly 96% from its all-time high.
The implications of this proposal are noteworthy for market participants. Lido holds a dominant 23.2% share of the Ethereum liquid staking market, yet its revenue has recently fallen by 23%. The DAO contends that the current market valuation does not reflect its strong fundamentals, as the protocol’s take rate has improved and rewards have only slightly declined despite broader market pressures.
For investors, the proposed buyback could serve as a catalyst for LDO’s recovery, potentially attracting interest from those looking to capitalize on perceived undervaluation in the governance token.
Source: cointelegraph.com