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The Lido token support community is contemplating a buyback of its project’s tokens from the open market. The objective is to halt the prolonged decline in the asset’s price and avert further depreciation.
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Since January 2024, the price of LDO has plummeted by 92% from its then all-time high of $4.05. Currently, the token is trading at $0.31.
Representatives from the Lido community have proposed allocating 10,000 staked ethers, which are held in the organization’s balance, for the token purchase. At the current price of $2.042 per coin, the total investment for the LDO buyback could reach $20.4 million. The market capitalization of LDO is estimated at $265.6 million.
The proponents of the buyback proposal have not yet initiated a vote on the matter; they are gathering feedback from members of the crypto community. Within Lido DAO, the need for a buyback is attributed to the unusually volatile fluctuations in the asset’s price, which are atypical for cryptocurrencies. According to the developers, this represents one of the most significant discrepancies between the market price of LDO and the fundamental metrics of the protocol in the token’s history.
Lido is a decentralized liquid staking protocol established in 2020. It allows users to participate in staking crypto assets, primarily ether, without sacrificing the liquidity of their investments. The proposal to buy back tokens has emerged amid a 23% decline in Lido’s revenue over the past year, dropping to $40.5 million. This is largely due to a 23% decrease in staking fees.
The LDO token is trading at a significant discount to ether, with a ratio of 0.00016, which is approximately 63% lower than the median value over the past two years. Meanwhile, the Lido protocol maintains a leading position in the ether liquid staking market, holding a 23.2% share, as noted by Dune Analytics.
At the beginning of the year, the number of ethers staked reached a new all-time high: over 36 million ETH, valued at $118 billion, is locked in the Beacon Chain, accounting for nearly 30% of the total circulating supply of coins.
