Lido DAO Activates Dual Governance, Giving stETH Holders A Say In Protocol Changes
In Brief
Lido DAO has implemented Dual Governance on Ethereum, enabling stETH holders to delay or exit protocol changes, thereby enhancing onchain protections and decentralizing control beyond LDO token holders.
A decentralized autonomous organization that oversees the Lido liquid staking protocol, Lido DAO activated Dual Governance on the Ethereum mainnet. This governance upgrade introduces a new framework designed to enhance onchain protections for users staking through Lido. The updated system enables holders of stETH and wstETH to delay the execution of protocol changes and exit the system in situations where proposed upgrades are considered contentious.
Prior to this implementation, Lido on Ethereum operated under a governance structure controlled exclusively by LDO token holders, with no embedded mechanism for stETH holders to respond to protocol changes. The introduction of Dual Governance retains the decision-making authority of LDO holders while also allowing stETH holders to influence the governance process through reactive safeguards. Although proposals are still initiated and voted on by LDO holders, the new structure allows stETH holders to delay execution and exit the protocol before changes are implemented.
If at least 1% of all stETH holders oppose a proposal, the execution is automatically paused for a minimum of five days to allow for further community assessment. This pause period can extend up to 45 days depending on the scale of opposition. In cases where opposition reaches 10% of stETH holders, a full block on execution is triggered, enabling dissenting participants to safely withdraw their ETH through a “rage-quit” process before any protocol modifications are enacted. These new mechanisms are intended to strengthen safeguards against potentially harmful governance decisions by increasing the difficulty and cost of executing malicious proposals.
Dual Governance Introduces Enforceable Exit Rights For Lido Stakers
“Dual Governance is a major milestone for DAO safety and shared power,” said Sam Kozin, Core Contributor at Lido Labs Foundation, in a written statement. “It empowers Lido stakers with enforceable exit rights, ensuring the community can thoughtfully respond rather than hastily react. The design fully embodies Ethereum’s core values — decentralization, user sovereignty, and credible neutrality,” he added.
Currently, close to $23 billion worth of ETH—approximately 26 percent of the total staked Ether supply—is being staked through the Lido protocol, reflecting the considerable scale at which the platform operates and highlighting the relevance of its governance developments. The smart contracts associated with this upgrade have undergone audits by Certora, OpenZeppelin, Statemind, and Runtime Verification.
In addition, the parameters of the system were evaluated using agent-based simulations conducted by CollectifDAO and game-theoretic modeling developed by 20squares.
By incorporating a mechanism that allows stakeholders to respond to governance decisions, the Dual Governance framework introduced by Lido DAO is designed to enhance decentralization, improve system predictability, and support the institutional reliability of Ethereum staking at a broader scale.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
