Haciyev Reşit 
Decentralized finance (DeFi) platform Lido Finance has introduced a new modular system proposal for LDO token buybacks, now open to voting by the Lido DAO community.
This system would enable LDO repurchases using stETH held in the Lido treasury. The first practical version is targeted for release in December 2025, paving the way for future buyback mechanisms.
What Is the NEST Modular Mechanism?
Lido has proposed the NEST (Modular Surplus Allocation Mechanism) framework to streamline buybacks. This mechanism:
- Enables buybacks by swapping stETH for LDO tokens.
- Directs the repurchased LDO tokens to the DAO Treasury, removing them from circulation.
- Impacts the distribution of governance rights among token holders, making value allocation more transparent and programmatic.
Over the long term, the mechanism is designed to allow stETH investments to be converted into LDO through automated modules and flexible parameters. The current implementation uses Aragon DAO votes to determine stETH amounts, swapping them for LDO via STONKS Cowswap orders approximately every 7,000 blocks (around once per day).
What Is Lido DAO (LDO)?
Lido DAO, launched in 2020, is a platform that enables users to easily create validator nodes across multiple blockchains. Through Lido, participants can stake assets in a liquid format, earning additional passive income on their holdings.
The platform is primarily focused on Ethereum staking. Like other staking systems, it relies on a liquidity and collateral model. Stakers receive tokens that represent their staked assets—for example, stETH when staking Ethereum.
Voting and Future Plans
- The proposal is open for DAO member voting until September 29, 2025.
- Current votes show a majority in favor of approval.
- If approved, the NEST system will launch its first practical version in December 2025.
- Future versions could introduce additional parameters and automated modules to further optimize stETH-to-LDO conversions.
Assessment
Lido DAO’s plan to implement LDO buybacks through a modular framework represents an innovative step in the DeFi ecosystem. The NEST mechanism not only facilitates repurchases but also strengthens governance processes and provides token holders with more transparent value allocation.
The first implementation, scheduled for December 2025, will lay the foundation for more automated and optimized systems in the future. This move highlights Lido’s strategy of efficiently utilizing treasury stETH to enhance LDO’s value and manage buybacks within a programmatic framework.
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