Lido DAO Set to Launch Dual Governance Framework Following Critical Vote
A decisive vote on-chain has formally enabled the implementation of “Dual Governance” within the Ethereum ecosystem’s largest liquid staking protocol, Lido DAO, according to a proposal update.
Time is running out for a crucial vote by LDO holders, set to conclude at 10:00 a.m. ET on Monday, June 30, determining the future governance structure of Lido. Passage of the proposal will trigger a novel dual-token system designed to enhance user protection.
Power Shift: Timelock Module Provides Accountability
If approved, this represents a fundamental change to power distribution. A new, custom dynamic timelock module will be introduced, granting stETH holders a direct, veto-like mechanism against governance actions initiated by LDO token holders.
As pseudonymous advisor and prominent researcher Hasu noted, this adds a significant layer of accountability under the hood, effectively increasing the barriers to controversial changes. Hasu stated:
“Lido really reduces the risk that users have from any kind of governance attack [and] the trust that they need in the maintainer companies and the LDO holders.”
The core idea, stemming from the inherent tension between providing liquidity and minimizing trust assumptions within liquid staking protocols, introduces a graduated execution delay system. The dynamic timelock scales based on opposition:
- If 1% of total stETH signals objection, execution is delayed by 5 days.
- If opposition hits 10%, the delay extends linearly up to a maximum of 45 days.
This mechanism provides affected stETH users a predictable window, potentially weeks before immediate execution, critically giving them time to exit. As Hasu emphasized, this represents a first of its kind in blockchain governance:
“This is about giving users access to liquidity while preserving the right to exit in a way no other protocol has managed,” Hasu explained.
“There used to be this dilemma between trust and liquidity, and dual governance is effectively breaking that dilemma. You no longer have to choose — you can have both.”
More Than Just Lido: Implications for Governance
The system’s relevance goes beyond Lido due to the fluctuating dynamics of the Ethereum staking withdrawal queue. According to Hasu, a robust Lido implementation could serve as a blueprint for other DeFi protocols. The design was reportedly years in the making, incorporating stress tests and adjustments for flash loan resistance.
Victor “kadmil” of Lido’s DAO operations team shared:
“We have paid people to try to break the design with flash loans, and subsequent adjustments tailored “make it flash-loan resistant.””
While direct voting power is limited to eligible LDO holders, the dual governance model provides a safeguard function for stETH.
Context and Current Status
The initiative draws comparisons to MakerDAO’s “emergency shutdown” mechanism but offers a graduated, non-destructive response system. Passing an earlier Snapshot vote, the on-chain Aragon vote is the final hurdle, requiring a minimum 5% quorum among LDO token holders.
As of press time (9:00 a.m. ET Friday), only 4% of eligible LDO token holders have participated in this final on-chain vote.
