Lido analyzes the NEST mechanism: initially adopting a treasury model to connect protocol growth with LDO value
Comparing news, the Ethereum staking protocol Lido DAO published an article explaining the NEST (Network Economic Support Tokenomics) mechanism to bind protocol revenue to LDO token values through on-chain automation to achieve continuous LDO repurchases.
NEST is a core component of Lido's “LDO Value Alignment” strategy, which aims to allow LDO holders to more directly share the benefits of the agreement's growth. The mechanism is supported by DAO treasury surplus funds. When Lido's pledged business revenue exceeds the set benchmark, part of the excess revenue will be automatically converted into LDO through CoW Swap.
According to the initial parameters set by Lido DAO, the NEST revenue benchmark is $40 million per annualized (approximately $109,000 per day). 50% of the excess amount will be used to repurchase LDO, with a daily repurchase limit of $50,000, and a 365-day cumulative limit of $10 million. Buybacks are carried out on a daily basis, using a permissionless on-chain process.
At the beginning of the launch of NEST, the “treasury-only mode” (treasury-only mode) will be used, and the purchased LDO will directly enter the DAO treasury. In the future, when market conditions are right, DAO can switch to LP mode through on-chain voting, using half of the funds to buy LDO and the other half to wstETH, and provide Curve liquidity.
Lido said that compared to solutions such as manual regular repurchases, direct token destruction, or simple revenue distribution, NEST uses smart contracts and on-chain governance to achieve a transparent, adjustable repurchase mechanism that does not require manual intervention.
The mechanism includes a number of risk control measures, including daily capital limits, adjustment of on-chain governance parameters, price oracle protection, and an emergency suspension mechanism to reduce the risks caused by market manipulation, oracle attacks, and fluctuations in protocol revenue.
Earlier backtesting based on revenue data from 2024 to 2025 showed that the NEST model is expected to execute LDO repurchases of approximately $7.09 million, which is in line with the target spending scale. Lido said that in the future, DAOs can adjust relevant parameters through on-chain voting according to changes in the agreement economy.
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