Lido Introduces Dual Governance for Enhanced User Protections

Lido, a prominent liquid staking protocol, is on the verge of implementing a significant governance reform known as "Dual Governance." This new mechanism aims to balance power among its user base, with a final vote set to conclude by June 30. The proposed system would grant stETH users the ability to delay the execution of DAO proposals they deem problematic. Unlike traditional timelocks, Lido’s version dynamically extends the waiting period based on the level of opposition a proposal faces. If a substantial portion of stETH holders object, delays could extend up to 45 days, providing users with ample time to exit before a change takes effect.

This flexible approach addresses a critical issue in liquid staking: the need for users to react to governance actions, especially when ETH withdrawal queues can take weeks. By adjusting the delay based on the controversy surrounding a proposal, the protocol ensures that users have sufficient time to respond to significant changes. The framework has been years in the making, with contributors like Hasu and Victor “kadmil” stress-testing the system, including simulations involving flash loans. Wrapped versions of stETH used in yield strategies are not eligible to vote directly but can be withdrawn to gain voting rights.

By decoupling voting power from execution authority, Lido seeks to resolve the long-standing dilemma between trust and liquidity in DeFi governance. This model has already received early approval in a Snapshot vote and, if passed on-chain, could set a precedent for similar frameworks across other decentralized protocols. This governance update represents a structural shift that could redefine how user protections and protocol upgrades coexist within the DeFi ecosystem.