Lido DAO has officially approved the Dual Governance update, empowering stETH holders with increased control over key protocol decisions. This improvement aims to address the power imbalance among token holders.
Overview of Dual Governance
The update was confirmed on June 30 following a successful vote by Lido DAO (LDO) token holders. The new system is set to launch on July 4. Dual Governance includes a dynamic timelock mechanism that allows stETH holders to block or delay proposals approved by LDO holders if they disagree.
Mechanisms of Rights and Control
If there is pushback from stETH holders, the timelock can increase based on the amounts locked. For example, if 1% of the total stETH supply is locked in protest, an additional delay of 5 to 45 days is added to the proposal. Upon reaching 10% opposition, a 'rage quit' mechanism is triggered, halting governance activities until dissenting participants exit.
Market Reaction to Changes
However, following the announcement of the update, the price of the LDO token decreased by 2% in the past day and 13% in the past month. This indicates market caution regarding the implementation of the new system. Nevertheless, Dual Governance is considered one of the most advanced structures in decentralized finance aimed at creating a more resilient and inclusive governance process.
The Dual Governance update in Lido DAO highlights the platform's commitment to protecting the interests of stETH holders and ensuring their participation in governance processes. The implementation of this system will mark an important step in the development of DAOs and Ethereum as a whole.
