Lido Approves New Governance Model Giving stETH Holders 10% Veto Power

Lido, a leading Ethereum liquid staking protocol, has approved a new governance model that empowers stETH holders with significant influence over decision-making processes. The newly implemented two-way governance structure introduces checks on LDO token holders, who previously controlled proposals and votes. Under this update, stETH holders can now delay or block proposals by locking their tokens in an escrow contract. If 1% of the total staked ETH is deposited, proposals face a 5-day delay. If the deposit reaches 10%, the proposal is entirely frozen, triggering a “Rage-Quit” mode, where dissenting stakers can exit or the proposal is scrapped.

The vote to implement this new governance model saw overwhelming support, with over 53 million LDOs voting in favor, narrowly surpassing the 50 million quorum required. Only one token holder opposed the change. The final phase of the vote, which allows for “No” votes or reversals, concludes on June 30. Ethereum’s co-founder, Vitalik Buterin, endorsed the move, describing it as a crucial safeguard against potential abuse and a means to bolster staker rights. Lido’s team celebrated the shift as one of its most significant governance upgrades to date.

This dual governance structure is designed to enhance the oversight capabilities of validators holding stETH tokens. By granting stETH holders the power to delay or veto decisions, Lido aims to create a more balanced and inclusive governance model. This update ensures that stakers have a direct voice in decision-making processes, aligning their interests more closely with the protocol’s overall direction. The new system is expected to foster greater transparency and accountability within the Lido ecosystem, ultimately benefiting all stakeholders involved.