The Lido governance community is reviewing a new proposal in the Protocol decision to give more influence on Staked Ethereum (Steth) holders.
The May 8 proposal, known as Lido Improvement Proposal 28 (LIP-28), introduces a dual governance framework.
Currently, only LDO token holders can vote for changes to the LIDO protocol. This gives you complete control over decisions that affect everyone in the ecosystem.
Steth owners are essential to the success of the platform, but there is no formal way to oppose or influence the DAO proposal.
The Defi Protocol proposal aims to give a more active role to the Steth owner in protocol decisions, particularly when proposals passed by the LDO token holders may be considered controversial.
Commenting on the proposal for Hasu, the strategy lead at Flashbots, he described it as “the most important Lido upgrade ever.”
Lido is Ethereum’s largest liquid staking platform and controls around 27% of the overall ETH staking market. This protocol allows users to use validators to wager ETH, exchange and receive STETH. This steth can be used in Defi apps and provides users with flexibility and liquidity.
How Lido’s dual governance model works
The proposed system adds a time lock mechanism between the proposal of DAO and its execution.
According to the proposal, this delay creates an opportunity for Steth owners to respond if the decision could have a negative impact on them. They do so by locking STETH, WSTETH, or NFTS into a special escrow agreement.
The delay period begins when the escrow deposit reaches 1% of the total Ethereum value (TVL) of Lido. If the deposit grows to 10% of TVL, the proposal enters a state of “stop anger.” This means that you cannot take action on the proposal until the locked token is returned to ETH.
This model gives a meaningful voice without forcing Steth Holders to abandon the protocol completely. It also allows DAO to pause and reconsider its divisive proposals.