Lido's buyback has not bought a single LDO. A forum model explains why
Victoria Shinder3 min readLido's on-chain buyback mechanism, NEST, has been live since 10 August 2026 and, according to a proposal posted on the Lido research forum on 7 October, has not bought a single LDO. Its budget counter stood at −$542,451 at the end of September. The author, forum user Kuzmich, built a model of the mechanism to see whether tuning would fix it, and concludes that it would not. The post is a proposal for discussion — nothing in it has been voted on — but the arithmetic is worth reading because it shows how a buyback can be designed never to trigger.
Why NEST does not buy. NEST only buys when Lido's staking revenue exceeds a reserve of $40 million, fixed independently of the DAO's actual budget. With the current module set, the post calculates, that threshold is covered only when ETH is above roughly $2,668; every weaker day adds to the deficit, and every dollar of accumulated deficit must be earned back before any purchase. At a constant $2,700 the model puts the first purchase 838 days away; at $2,680, about 6.3 years; below about $2,668, never. Across random price paths, NEST makes at least one purchase in the next twelve months in only about half of the scenarios.
Why tuning is the wrong lever. Lowering the threshold or raising the share of surplus sent to buybacks does buy more — but, in the model, it also raises the share of purchases made in years the DAO ends at a loss. A $30 million threshold with a 100% share at current expenses would buy about $6.9 million of LDO a year while the DAO's profit before buybacks is only about $1.3 million — in the author's words, "spending the treasury, not distributing profit". And because the threshold is unrelated to spending, savings never reach buybacks: cut expenses by 10%, 20% or 30% and NEST still buys about $2.15 million a year.
What is proposed. The central request is to cut the Foundations budget for 2027 to around $30 million, about 30% below the current $43.8 million, and in the same vote set NEST's threshold equal to the approved budget. With threshold equal to budget, the model's buybacks rise from $1.58 million at today's spending to $4.28 million at a 30% cut, with the share of purchases in loss-making years staying at about 5–8%; at $2,700 ETH the existing deficit would be repaid in about 40 days. Further steps include changing the threshold only together with the budget, publishing budget requests with an estimate of the buybacks they imply, a separate top-up programme for NEST, not using bought LDO for contributor payouts, and later a quarterly true-up against actual expenses. The author also flags off-budget items such as $6.06 million of Kelp-related costs that would need separate treatment.
The general point. A buyback tied to a fixed revenue threshold is a promise conditional on price. Whether Lido's DAO accepts the trade the post offers — lower spending in exchange for buybacks that actually happen — is a governance question; the model's contribution is to show that, as configured, the mechanism's output depends almost entirely on ETH staying above a line it does not control.
Source: Lido Research Forum, "NEST: tying the buyback threshold to the approved budget" (7 October 2026) — https://research.lido.fi/t/nest-tying-the-buyback-threshold-to-the-approved-budget/11982