Lido’s decentralized autonomous organization (DAO) is proposing a special buyback of its governance token, LDO, amounting to $20 million. This initiative aims to rectify what the DAO describes as a steep price decline relative to Ether.

The proposal, submitted on Friday, seeks to exchange 10,000 Lido Staked Ether (stETH) tokens worth approximately $20 million from the DAO’s treasury for LDO. The DAO contends that LDO is currently undervalued.

“This is not a routine fluctuation. It represents one of the most significant dislocations between LDO’s market price and its underlying protocol fundamentals in the token’s history.”

This buyback could significantly impact LDO’s value, which has plummeted nearly 96% from its peak price. In November, a member of the Lido DAO had suggested an automated process for buybacks to enhance LDO’s market price, but that plan remains unexecuted.

Lido DAO has highlighted that LDO is trading at a considerable discount compared to Ether (ETH) at a ratio of 0.00016, about 63% less than its two-year average. The protocol continues to lead in the Ethereum liquid staking market with a 23.2% stake.

Despite recent revenue drops due to reduced staking fees, Lido DAO remains optimistic about the protocol’s foundations, emphasizing that operational costs have improved.

In summary, Lido DAO’s proposed approach includes purchasing up to 10,000 stETH in smaller increments utilizing strategies to mitigate market volatility. Each purchase would require approval from token holders with reports on outcomes after each batch.