Lido DAO exposes token flaw and forces a budget review

Lido’s DAO is debating whether its 2027 grant budget should guide automated purchases of the LDO governance token.

The Oct. 7 discussion puts two choices on the table: link NEST’s revenue threshold to approved spending, or periodically clear the buyback engine’s negative spending counter.

NEST had made no purchases funded by its allocator when checked on Oct. 13. Genuine cost cuts could leave more income available for buying, while a reset would only remove past constraints.

Governance contributor Kuzmich proposed the budget link on Oct. 7. In an Oct. 9 response, Jenya_K supported considering it in the 2027 grant request, but said the amount must come from bottom-up planning.

Kuzmich’s Oct. 11 follow-up corrected the treatment of staking rebates and tested profits without assumed treasury income.

Under Lido’s implemented specification, NEST compares measured staking revenue with a daily baseline of $109,589, approximately $40 million a year. Half the difference feeds a running spending counter.

Revenue below the baseline subtracts from that counter, and stronger revenue must repair the shortfall before purchases can start. A treasury can hold assets while the counter remains negative, and a positive counter would not by itself establish accounting profit.

The latest captured checkpoint on Oct. 13 recorded a counter of minus $564,230.96 and a skipped allocation.

Separately, the allocator held about 41.12 stETH when checked on Oct. 13. Its complete indexed transfer history showed one 41-stETH top-up on Aug. 28 and no outgoing trans

Any future spending must satisfy sufficient counter capacity and funded stETH. It also faces a $50,000 daily cap, a $10 million cap over fixed 365-day windows, and a $1,000 allocation minimum.

Lido’s separate discretionary stETH-to-LDO acquisitions are a different program, and the community reconstruction identifies an August trade as a route test.

NEST does not currently capture monthly Community Staking Module rebates or Earn income. Jenya_K said CSM rebates are already included in financial reporting, so adding them again to reported net revenue would double-count them.

Lido’s unaudited accounts for the first half show $15.7 million in net staking revenue plus $230,000 from Earn, producing $15.9 million in net DAO revenue. Foundations expenses of $14.3 million left an operating surplus of $1.6 million, and a $6 million Kelp-related one-off turned the total result into a $4.4 million loss.

The report separately places $1.4 million of treasury income and a $60.9 million asset-price effect in its treasury bridge, outside the profit-and-loss statement. Jenya_K also warned that treasury operations can include losses.

The 2026 grant request presents a $43.8 million baseline, and the first-half report references $41 million and projects full-year expenses of $37.7 million. The cited materials do not explicitly reconcile the two baseline labels, and none is interchangeable with NEST’s $40 million revenue threshold.

Kuzmich’s Oct. 11 model uses 1,000 ETH price paths over 12 months from Oct. 1, beginning at $2,679.84 with 61% annual volatility and no expected arithmetic price drift. Its purchase frequencies are not measured probabilities of what will happen next.