Lido Explains NEST Mechanism, Initially Adopting Treasury Model to Buy Back LDO

The Ethereum staking protocol Lido DAO interprets the NEST (Network Economic Support Tokenomics) mechanism, aiming to bind protocol revenue with the value of LDO tokens through an on-chain automated approach, facilitating LDO buybacks. NEST is central to Lido's 'LDO Value Alignment' strategy, allowing LDO holders to directly share in the protocol's growth profits. This mechanism is supported by surplus funds from the DAO treasury, and when Lido's staking business revenue exceeds an annualized benchmark of $40 million (approximately $109,000 daily), 50% of the excess revenue will be used to buy back LDO, with a daily buyback limit of $50,000 and a cumulative annual limit of $10 million. The buyback will be executed daily using a permissionless on-chain process. Initially, NEST will adopt a 'Treasury Model', with purchased LDO going directly into the DAO treasury. In the future, it can switch to an LP model through on-chain voting, allocating half of the funds to buy LDO and converting the other half into wstETH to provide liquidity on Curve. Lido states that NEST achieves a transparent, adjustable, and automated buyback mechanism through smart contracts and on-chain governance, incorporating risk control measures such as daily funding limits, adjustments to on-chain governance parameters, price oracle protection, and emergency pause mechanisms. Backtesting based on revenue data from 2024 to 2025 indicates that the NEST model is expected to execute approximately $7.09 million in LDO buybacks, with the DAO able to adjust relevant parameters according to changes in protocol economics.

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