Lido DAO reviews 2027 budget over token-buying model

Lido DAO is reviewing its 2027 budget after analysis found that lowering NEST’s revenue threshold could increase automated LDO purchases even when the DAO operates at a loss. The discussion concerns whether to link the system to approved spending or reset its negative spending counter periodically.

Governance contributor Kuzmich proposed linking NEST’s revenue threshold to the 2027 grant budget on Oct. 7. Jenya_K supported considering the link in the grant request on Oct. 9 and said the figure should come from bottom-up planning. Kuzmich provided revised calculations on Oct. 11 that included staking rebates and excluded assumed treasury income.

NEST compares tracked staking revenue with a daily baseline of $109,589, or about $40 million annually. Half of the difference is added to a running spending counter. Revenue below the baseline reduces the counter, and future revenue must first cover the deficit before purchases can start.

The counter was negative $564,230.96 on Oct. 13, and NEST skipped an allocation. Its allocator held about 41.12 stETH after receiving 41 stETH on Aug. 28. No outgoing transfers were recorded. Purchases require enough counter capacity and stETH funding. They are also subject to a $50,000 daily limit, a $10 million limit over fixed 365-day periods and a $1,000 minimum allocation.

The analysis found that the published budget model did not match its description of expenses. The forum model treated actual expenses as equal to the approved budget, while the code scaled a forecast expense curve by each budget divided by $43.8 million. The curve implied about $39.8 million in annual expenses before scaling, including about $27.3 million in the row labeled $30 million.

After setting actual expenses equal to each threshold, average modeled purchases were $2.32 million at a $40 million threshold, $3.35 million at $35 million and $4.71 million at $30 million. Median purchases were zero, $1.26 million and $3.18 million, respectively. Average modeled profit before purchases and treasury income was negative $1.92 million at $40 million, $3.08 million at $35 million and $8.08 million at $30 million.

The purchase figures did not change after the expense correction because NEST calculates buying capacity from the revenue threshold rather than actual expenses. At the $30 million threshold, the share of purchase-making scenarios that ended at a loss rose to 22.2% from 12.6% in the published comparison.

The model used 1,000 Ethereum price paths over 12 months beginning Oct. 1. It used an initial ETH price of $2,679.84, annual volatility of 61% and no expected arithmetic price drift. The purchase frequencies describe model scenarios and are not measured probabilities of future events.

A separate proposal would reset the counter at the end of each year while retaining positive capacity. A corrected comparison produced average spending of about $2.6 million per modeled 365-day period with carry-forward and $2.8 million with annual resets. Quarterly resets produced about $2.9 million. Loss-making periods represented 19.5% of purchase-making periods with carry-forward and 30% with annual resets.

NEST has no direct reset function. Its governance-controlled threshold setters preserve the accumulated counter and apply changes prospectively, so recurring resets would require a different implementation or governance arrangement.

Lido’s unaudited first-half accounts reported $15.7 million in net staking revenue and $230,000 from Earn, for $15.9 million in net DAO revenue. Foundation expenses totaled $14.3 million, producing a $1.6 million operating surplus. A $6 million Kelp-related one-off resulted in a $4.4 million total loss. Treasury income and asset-price changes are reported separately from profit and loss.

The 2027 budget would need to account for additional revenue without double-counting Community Staking Module rebates or Earn income and provide stETH funding for permitted purchases. Acquired LDO would be returned to the DAO treasury. NEST does not automatically burn the tokens or distribute them to holders.