Original title: (LDO surges over 60% in a week, is the 'prince' of ETH finally discovering its value?)
Original author: Azuma, Odaily Planet Daily
The leading player in the liquid staking track, Lido (LDO), has finally strengthened recently. According to OKX market data, as of 10:00 AM Beijing time on August 11, LDO was quoted at 1.52 USDT, with a 24-hour increase of 14.21%, and a staggering 64.5% increase over the past week.
As the largest liquid staking protocol in the Ethereum ecosystem, Lido has long dominated the total locked value (TVL) rankings in the Ethereum ecosystem and even the entire on-chain ecosystem. Although it has recently been surpassed by Aave, which is rapidly growing due to the borrowing of USDe assets, Lido remains one of the protocols with the most voice in the entire Ethereum ecosystem.
The recent rise of LDO can generally be attributed to both macro and micro factors.
Macro: Regulatory clarity on attributes, progress of staking ETFs.
First, at the macro level, on August 6, the U.S. Securities and Exchange Commission officially released a statement on liquid staking activities, which clearly stated that 'liquid staking activities' related to protocol staking do not involve the issuance and sale of securities unless the deposited cryptocurrencies are part of an investment contract or are subject to the constraints of an investment contract. Participants in liquid staking activities do not need to register with the SEC under the Securities Act, nor do they need to comply with the registration exemption provisions related to these liquid staking activities.
In June 2024, when Gary Gensler was still at the helm of the SEC, the agency charged Lido and Rocket Pool and other liquid staking projects as securities. On that day, LDO fell over 10% due to this negative news and continued to be in a downturn for a long period afterward. Just a year later, the new SEC's statement clarified that their business models do not involve securities attributes, effectively loosening the regulatory constraints for the further operation and development of such projects.
In addition to the regulatory shift, another key development related to the staking track is that BlackRock has submitted an application to the SEC to introduce a staking mechanism in its spot Ethereum ETF. Although this application is still under review, the SEC's attitude suggests that approval is likely not too difficult. The market generally expects that with the approval of staking ETFs, Lido, which currently accounts for nearly 25% of Ethereum staking shares, is expected to receive a boost in business and capital chasing.
Micro: The LDO repurchase plan is finally on the table.
Compared to the indirect impact at the macro level, discussions about the LDO repurchase plan may be the direct factor influencing the price trend in the short term.
On August 7, Lido community member Kuzmich submitted a draft on the 'LDO repurchase plan' in the governance forum. The draft mentioned that Lido's treasury currently holds liquidity assets worth $145 million (17 million USDC, 11.9 million USDT, 1.22 million DAI, 28,640 stETH), but these assets have not generated any earnings for the protocol.
The draft suggests that Lido should dynamically execute LDO repurchases based on treasury balances to improve the protocol's capital utilization model, boost LDO prices, and restore market confidence in LDO's value. Specifically, the proposal suggests that under the current treasury reserve scale, 70% of liquidity assets should be used for regular LDO repurchases, while 30% should be retained in the treasury for operational and strategic needs; when treasury liquidity assets fall between $50 million and $85 million, the ratio will be adjusted to 50% repurchase / 50% retention; and when treasury liquidity assets fall below $50 million, the ratio will be adjusted to 0% repurchase / 100% retention (pausing repurchases until the threshold is restored).
According to the planning of the Lido governance forum, if all goes smoothly, the draft will collect community feedback from August 7 to 14; then it will be discussed in the Lido token holders' conference call on August 14; afterwards, the proposal will be revised based on feedback from August 15 to 24; and finally submitted for voting on Snapshot on August 25.
Although there are certain opposing voices within the community forum, the majority of users questioning the plan focus on the specific details of the proposal, aside from a few community members who insist that 'buybacks are just a short-term game,' such as whether the tokens will be burned after the buyback, and the methods and execution of the buyback are still not clear, among other issues.
Considering that the current draft is still in its early stages, it is expected that it will be further modified after discussions in the conference call. Coupled with the recent rare strong upward movement in LDO prices, there is an optimistic expectation that this draft or other repurchase plans derived from discussions based on this draft will receive a certain level of community support.
Is the 'prince' of ETH finally discovering its value?
As a recognized ETH Beta, LDO's past performance over a considerable period has been difficult to satisfy.
The momentum of borrowing and repurchasing in AAVE has quickly surged above $300; the ENA borrowing business flywheel and treasury plan have skyrocketed (see (up nearly 50% in a week, could ENA be the largest Beta for ETH?)); while PENDLE has opened up new imaginative spaces with Boros (see (the funding rate has finally become a tradable asset, how will Pendle's sub-platform Boros disrupt the arbitrage market?)), LDO has long been in a relatively weak state, even though the expectations for 'staking ETFs' have been voiced for a long time, they have failed to push LDO's price performance over a relatively long period.
Under the dual stimulus of current macro and micro factors, LDO has finally shown some signs of a trend reversal. Could this be the beginning of price discovery for this ETH 'prince'? It's still too early to make a judgment, but there is some hope.
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