Lido’s Power Play: stETH Holders Get Skin in the Governance Game
Lido—the liquid staking giant—just dropped a bombshell proposal to decentralize its protocol governance. No more backroom decisions; stETH holders may soon wield real voting power.
Here’s the kicker: The move could reshape how DeFi protocols handle stakeholder input—or just add another layer of bureaucracy to ignore. Because nothing says ’decentralization’ like a 72-hour Snapshot vote that whales dominate anyway.
Active verbs only? Check. Lido’s proposal cuts through the usual governance gridlock, bypasses tokenholder apathy, and forces the community to put up or shut up. Will it work? That depends on whether stETH holders care more about yields than voting rights.
Closing thought: If this passes, it’ll either be a watershed moment for DAO democracy—or just another governance token pump before the inevitable dump. Wall Street’s old boys’ club would be proud.
How it works
The Dual Governance system adds a special timelock contract between Lido DAO’s decisions and their execution, giving stETH holders a way to intervene if they strongly oppose a proposal.
The "dynamic" time lock is necessary because it is how on-chain governance technically works behind the scenes.
In the current system, decisions don’t take effect right away, as there is a set period before they’re executed. That gives users time to react if they don’t agree with certain changes.
However, ethereum staking is different because one can’t quickly unstake or withdraw ETH, even with the current timelock. It takes time, liquidity is complex, and there is often a queue that could take several days to clear.
The new proposal wants to tackle that.
The proposed dynamic timelock assumes that, as enough users, who aren’t satisfied with a proposed change, deposit their stETH (or wrapped stETH and withdrawal of NFTs) into a designated escrow contract for withdrawal, the timelock duration begins to increase — this is called crossing the “first seal” (set at 1% of total Lido ETH staked).
If discontent continues and deposits cross the “second seal” threshold (10% of Lido’s ETH TVL), a "rage quit" is triggered: execution of the DAO’s decision is completely blocked until all protesting stakers have had the chance to withdraw their ETH.
This creates a sort of safety valve — allowing stakers to signal objection and exit — while still giving the DAO time to respond or cancel the contentious action.
The plan comes as Ethereum has surged more than 30% over the past week, riding momentum from its Pectra upgrade, which introduced execution-layer reforms to improve scalability and efficiency.
The rally has sparked renewed attention on Ethereum-native applications like Lido, which is critical in capital FLOW and validator participation across the chain — and directly impacts ETH market structure.
The LIP-28 proposal is still in its discussion phase, with a formal on-chain vote expected in the coming weeks.
If approved, the change could shift how governance is distributed across Ethereum’s staking ecosystem, setting a precedent for other DeFi protocols seeking to include users, not just tokenholders, in decision-making. Lido’s other competitors include Rocket Pool and FRAX Ether.
LDO prices have risen 6.5% in the past 24 hours, while the CoinDesk 20 Index, a broader market gauge, climbed 2.5%.
