Lido DAO is considering whether its 2027 grants budget should influence the conditions for NEST to automatically buy LDO, or whether a periodic reset of the system's negative spending counter could ease the restriction. Both options could change the amount of LDO purchased, but their financial effects differ: cutting actual costs would improve the DAO's operating balance, while lowering the revenue threshold alone could increase buybacks even when the DAO as a whole remains loss-making.
The discussion began on October 7, when governance contributor Kuzmich proposed linking NEST's revenue threshold to approved spending. Jenya_K responded on October 9 that the idea could be considered as part of the 2027 grants process, while saying the budget amount should be determined through bottom-up planning. Kuzmich updated the model on October 11, changing how staking rebates were treated and adding profit estimates that did not assume treasury income.
As of October 13, NEST's configurator had not executed a buyback. LDO rose 4.85% over the previous 24 hours to $0.43, while ETH was trading at $2,508.96, up 0.92%. Those market prices are separate from NEST's buyback eligibility, which still depends on the revenue counter and the funds held by the configurator.
How NEST Accumulates Buyback Capacity
Under Lido's existing NEST rules, actual staking revenue is compared with a daily benchmark of $109,589, equivalent to roughly $40 million on an annualized basis. Half of the difference between revenue and the benchmark is added to a continuously accumulating spending counter.
When revenue falls below the benchmark, the counter declines. Even after revenue recovers, the previous shortfall must first be offset before a buyback can begin. Treasury assets held by the DAO therefore do not, by themselves, mean that NEST has available buyback capacity. A positive counter alone also does not demonstrate that the DAO has generated accounting profit.
The latest on-chain checkpoint recorded on October 13 showed a negative counter of $564,230, with one allocation skipped. The configurator held about 41.12 stETH at the time. The complete transfer history available for review shows that 41 stETH was transferred in on August 28, with no subsequent outflow recorded.
Future purchases require both sufficient counter capacity and stETH deposited into the configurator. The rules also impose a daily limit of $50,000, a $10 million cap over a fixed 365-day period, and a minimum allocation of $1,000 per transaction.
Lido also has a separate stETH-to-LDO purchase arrangement controlled by the DAO. That program is not the same as NEST. A transaction from August identified in the community's review was marked as a routing test and should not be treated as an automatic NEST buyback.
Half-Year Accounts Show Operating Profit and an Overall Loss
NEST currently excludes monthly Community Staking Module (CSM) rebates and Earn revenue. Jenya_K said CSM rebates are already included in the financial reporting; adding them again to reported net revenue would count the same income twice.
Lido's unaudited accounts for the first half of 2026 reported $15.7 million in net staking revenue, $230,000 in Earn revenue and total DAO net revenue of $15.9 million. After $14.3 million in foundation spending, operating profit was $1.6 million. A one-off $6 million expense related to Kelp, however, turned the period's overall result into a $4.4 million loss.
The accounts also recorded $1.4 million of treasury income and $60.9 million in asset-price movements in the treasury change statement rather than in the income statement. Jenya_K noted that treasury operations can also generate losses. NEST's staking-revenue measure, the DAO's operating result and changes in treasury assets are therefore separate accounting concepts and cannot be substituted for one another.
The budget figures also use different baselines that still need to be reconciled. The 2026 grants request lists a $43.8 million baseline, while the first-half report refers to $41 million and projects full-year spending of $37.7 million. The available material does not explain how those figures connect, and none is identical to NEST's annual revenue threshold of about $40 million.
Revised Spending Assumptions Reduce Estimated Profit
Kuzmich's October 11 model used October 1 as its starting point and simulated 1,000 ETH price paths over the following 12 months. The model began with ETH at $2,679.84 and assumed 61% annualized volatility, with no arithmetic price drift. The number and value of simulated buybacks are scenario outputs, not forecasts of the probability of future events.
Under the current rules, the published model produced an average buyback of about $2.3 million, while the median was zero. Higher ETH price paths lift the average, but more than half of the simulated scenarios generated no purchase. The model also showed that a lower budget-linked threshold would result in a larger buyback amount.
The original profit comparison contained an important mismatch. The forum description said actual spending was equal to the approved budget, but the model code scaled a projected spending curve in proportion to a budget of $43.8 million. Before scaling, that curve represented annual spending of about $39.8 million. In the scenario labelled as a $30 million budget, actual spending included in the model was about $27.3 million.
When actual spending is set equal to each scenario's threshold, while the published revenue paths and buyback rules remain unchanged, the results are as follows. Profit excludes treasury income and is measured before buybacks:
| Annual threshold and actual spending | Average simulated buyback | Median buyback | Average simulated profit before buybacks |
|---|---|---|---|
| $40 million | $2.32 million | $0 | -$1.92 million |
| $35 million | $3.35 million | $1.26 million | $3.08 million |
| $30 million | $4.71 million | $3.18 million | $8.08 million |
Correcting the spending assumption does not change the buyback amount in any scenario because the current version of NEST determines purchases from the revenue threshold and does not check actual spending. In the $30 million scenario, average simulated profit excluding treasury income falls from the previously published $10.7 million to about $8 million. Among paths that generated a buyback, the share ending in a loss rises from 12.6% to 22.2%.
A separate sensitivity analysis starting on October 13 assumed that funding remained available and used the updated counter and the ETH price shown in the browser. September expenses, along with the first-half deductions and Earn assumptions, were left unchanged. Under that analysis, the median buyback in the $30 million scenario was $2.1 million.
Under these assumptions, cutting actual spending improves profit. Lowering the contract threshold alone increases buyback capacity, but does not ensure that the DAO's overall operations become profitable.
Counter Resets Would Reduce Loss Carryovers
Another proposal would reset the negative counter annually or quarterly. An annual reset would clear a negative balance at the end of each calendar year while preserving positive capacity, effectively preventing past revenue shortfalls from continuing to suppress future buybacks.
After adjusting the original simulation and correcting an issue in which adjacent 365-day profit periods double-counted September 2028, the average spending carried forward under the existing negative-balance approach was about $2.6 million per simulated 365-day period. An annual reset raised that figure to about $2.8 million, an increase of roughly 8%, while a quarterly reset produced about $2.9 million.
Excluding treasury income, the share of periods that both generated a buyback and ended in a loss was about 19.5% with the existing counter and 30.0% with an annual reset. Those loss-making periods represented about 3.5% and 4.4% of total simulated buyback value, respectively. The model therefore supports a limited conclusion: resetting the counter would not increase DAO profit, and its effect on simulated purchases would be smaller than changing the budget threshold.
The current configurator has no direct function for resetting the counter. A threshold change controlled through voting could preserve the accumulated counter and apply prospectively. A periodic reset would require a separate contract implementation or governance arrangement.
Purchased LDO Would Remain DAO Property
The 2027 grants process will need to define an executable spending budget and the corresponding threshold, avoid double-counting new revenue, and provide funding for approved purchases. Under the current treasury structure, purchased LDO would remain owned by the DAO. It would not be automatically burned or distributed to token holders.
Jenya_K said there is currently no specific plan for the LDO already purchased. Burning remains a proposal under discussion, while using the tokens for liquidity would also require a separate DAO decision.
Lido's financial reporting treats token purchases as asset exchanges or purchases, so they do not immediately affect the income statement. LDO is also excluded from headline treasury value. Increasing the DAO's LDO holdings changes the composition of its treasury assets, but does not by itself demonstrate stronger profitability, provide price support or improve returns from ETH staking.