Lido’s DAO is considering whether its 2027 grants budget should determine automated purchases of its LDO governance token, after scrutiny exposed a mismatch between NEST’s spending rules and the organisation’s actual finances.
A 7 October governance discussion proposed two options: tie NEST’s revenue threshold to approved spending, or periodically reset the buyback engine’s negative spending counter.
NEST had made no allocator-funded purchases when checked on 13 October. Its counter stood at minus $564,230.96 and the latest allocation had been skipped. The allocator held about 41.12 stETH, after receiving a 41-stETH top-up on 28 August, with no outgoing transfer recorded.
Under Lido’s specification, NEST compares staking revenue with a daily baseline of $109,589, or about $40m annually. Half the difference is added to a running spending counter. Revenue below that level reduces the counter, while later income must first clear the deficit before purchases can begin.
A negative counter can therefore coexist with treasury assets, while a positive counter does not necessarily mean the DAO is profitable. Purchases must also have enough counter capacity and funded stETH, and are limited to $50,000 a day, $10m across fixed 365-day periods and a minimum allocation of $1,000.
Governance contributor Kuzmich proposed linking the mechanism to the 2027 budget on 7 October. Jenya_K backed consideration of the idea in the 2027 grant request, but said the figure should be built from the bottom up. Kuzmich’s 11 October update corrected the treatment of staking rebates and modelled profits without assumed treasury income.
NEST does not currently include monthly Community Staking Module rebates or Earn income. Jenya_K said CSM rebates already appear in financial reporting, meaning counting them again as net revenue would double-count them.
Lido’s unaudited first-half accounts report $15.7m in net staking revenue and $230,000 from Earn, giving $15.9m in net DAO revenue. After $14.3m in foundation expenses, the operating surplus was $1.6m. A $6m Kelp-related one-off produced a total loss of $4.4m.
Treasury income of $1.4m and a $60.9m asset-price effect are shown separately from profit and loss. Jenya_K also warned that treasury operations can generate losses.
The 2026 grant request lists a $43.8m baseline, while the first-half report refers to $41m and forecasts full-year expenses of $37.7m. The documents do not reconcile those labels, and neither is interchangeable with NEST’s $40m revenue threshold.
Kuzmich’s model used 1,000 ETH price paths over 12 months from 1 October, starting at $2,679.84, with 61% annual volatility and no expected arithmetic price drift. The resulting purchase frequencies are not forecasts of actual probabilities.
Under the current rule, average purchases were about $2.3m, but the median was zero. Lower thresholds increased purchases, even though the DAO could still finish the period with an operating loss.
The model originally contained an expense mismatch: the forum assumed actual costs matched the approved budget, while the code scaled a forecast expense curve by each budget against $43.8m. That implied roughly $39.8m in annual expenses before scaling and $27.3m for the $30m case.
Correcting the expenses did not change purchases, because NEST responds to the revenue threshold rather than actual costs. At $30m of spending, average profit excluding treasury income fell from $10.7m to $8m, while loss-making purchase periods rose from 12.6% to 22.2%.
A separate CryptoSlate sensitivity analysis, beginning on 13 October and using the refreshed counter and explorer ETH price, produced a $2.1m median for the $30m scenario. It retained September fee volumes and the first-half deduction and Earn assumptions.
The analysis found that genuine spending cuts improve the profit balance, whereas lowering the contract threshold simply permits more buying.
A yearly reset would remove a negative counter at the calendar year-end while retaining positive capacity. Corrected modelling found average spending of about $2.6m per 365-day period with carry-forward, $2.8m with annual resets and $2.9m with quarterly resets. Annual resets therefore increased spending by about 8%.
Loss-making periods represented 19.5% of purchase-making periods with carry-forward, compared with 30% under annual resets. They accounted for about 3.5% and 4.4% of purchase dollars respectively. The conclusion was limited: resets cannot improve profitability and have less effect than budget changes.
NEST has no direct reset function. Its Voting-controlled threshold setters preserve the accumulated counter and apply changes prospectively, so a recurring reset would require a different implementation or governance arrangement.
The 2027 grant process must set a feasible budget and corresponding threshold, include additional revenue without double-counting and fund any permitted purchases. Acquired LDO is returned to the DAO’s treasury, with no automatic burn or holder payout. Jenya_K said there were no specific plans for the tokens; burns remain a proposal and liquidity mode would require a separate DAO decision.
Lido treats the acquisitions as asset swaps or purchases with no immediate profit-and-loss impact, and excludes LDO from headline treasury value. More buying can alter the treasury’s asset mix without proving stronger earnings, price support or improved ETH staking returns.
