Lido’s Power Play: stETH Holders Get Voting Rights in Bold Governance Overhaul

Lido DAO drops a bombshell proposal—dual governance could give stETH holders veto power over key protocol decisions. Finally, the ’passive’ in passive income gets an upgrade.

The move targets growing criticism of centralized decision-making in DeFi. Now stakers can flex their muscle—if they bother to vote between yield farming and Twitter wars.

One hedge fund manager yawned: ’How quaint—governance tokens actually governing.’ Meanwhile, ETH whales are recalculating their staking strategies.

How Lido’s Dual Governance model works

The proposed system adds a timelock mechanism between DAO proposals and their execution.

According to the proposal, this delay creates an opportunity for stETH holders to respond if a decision could negatively impact them. They WOULD do so by locking their stETH, wstETH, or withdrawal NFTs into a special escrow contract.

Once deposits in the escrow reach 1% of Lido’s Ethereum total value locked (TVL), a delay period begins. If deposits grow to 10% of TVL, the proposal enters a “rage quit” state. This means no action can be taken on the proposal until the locked tokens are converted back to ETH.

This model gives stETH holders a meaningful voice without forcing them to abandon the protocol entirely. It also allows the DAO to pause and reconsider divisive proposals.