New Lido Dual Governance Mechanism: stETH Holders Gain Real Power!
Lido DAO has officially adopted dual governance, a significant development that will provide stETH holders greater control over crucial protocol choices. After a successful vote by Lido DAO token holders, Lido confirmed the decision on June 30 in a post on X.
On July 4, the new system is scheduled to go live on-chain. If stETH holders disagree with ideas accepted by LDO holders, they can block or delay them using a dynamic timelock mechanism proposed by dual governance.
Governance Revolution: Lido stETH Holders Can Now Delay or Block Proposals
The longer the delay, the more stETH is stuck in opposition. Any proposal is subject to an extra time lock of five to forty-five days if at least one percent of the total supply of stETH is locked in protest. A “rage quit,” which stops all governance operations until the opposed stakeholders have left the protocol, is triggered when 10% opposition is attained.
In addition to ensuring that Ethereum stakeholders are not left out of governance decisions that they disagree with, the functionality aims to reduce governance capture issues. It addresses long-standing concerns about the imbalance of power between holders of LDO and those who actively stake ETH through Lido.
Can Lido’s Dual Governance Save Ethereum Staking from Risky Decisions?
Lido claims that the new system serves as both a safety precaution and an indication of disagreement. This framework is designed to keep plans that are hurried or potentially dangerous from being implemented before stakeholders have had a chance to react. Additionally, it makes it easier for users who stake Ethereum through Lido to withdraw if they disagree with the DAO’s course. In order to guarantee protocol stability, the design also incorporates a number of safety measures. These consist of:
- A Reseal Committee to control the delays in proposals
- A Tiebreaker Committee to break deadlocks in decisions
- An Emergency Committee is to step in when a major system fails
One of the most sophisticated DAO structures to date, created in decentralized finance, is the dual governance framework. Lido wants to make the governance of Ethereum staking more robust and inclusive by bringing stakers’ and token holders’ incentives into alignment.
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