A significant capital allocation initiative has emerged within Lido Finance ($LDO) ecosystem. The Growth Committee, operating within the Lido DAO, has proposed a new plan to accumulate $LDO tokens that use some of the sETH assets in the DAO treasury.
According to the proposal, assuming favorable market conditions persist, $LDO tokens will be purchased with a maximum of 10,000 stETH, and this process will be managed through the Lido Ecosystem Foundation. The purchased $LDO tokens are returned to the treasury and a detailed implementation report is shared at the end of the process.
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The main reason behind the proposal is that $LDO‘s price against $ETH is trading at significantly lower levels compared to historical averages. The current one $LDO/$ETH The ratio is estimated at approximately 0.00016, which represents a decrease of 63% compared to the average of the past two years and a decrease of 70% compared to the previous level of approximately 0.0005. It is claimed that this is not just a short-term fluctuation, but a significant discrepancy between the token price and the fundamental performance of the protocol.
According to the committee, this price deviation is not due to a deterioration in protocol performance. While net protocol rewards fell by about 20% over the same period, the decline in the $LDO/$ETH ratio reached 50%. However, it is said that costs have improved by 13% year-on-year and the protocol’s revenue share has increased from 5% to 6.11%, increasing its revenue-generating ability. Lido’s continued position as the leading liquid staking protocol in terms of Total Value Locked (TVL) and stable revenue generation also support this view.
*This is not investment advice.