Lido Proposes Dual Governance to Empower stETH Holders

Lido may soon reshape how decisions are made within its ecosystem. A new proposal, LIP-28, introduced on May 8, aims to give staked Ethereum (stETH) holders the power to counter potentially harmful decisions made by LDO token voters.

Currently, only LDO holders control governance, even though stETH holders make up the backbone of the protocol’s liquidity engine. The proposed “Dual Governance” model would change that, offering a way for stETH participants to push back on proposals they find concerning—without exiting the protocol entirely.

The plan involves a smart contract-based safeguard. If a proposal passes and stETH holders want to challenge it, they can lock their tokens in an escrow. Should the deposits reach 1% of Lido’s ETH TVL, a delay is triggered. At 10%, the measure hits a full stop, suspending execution until tokens are withdrawn and converted back to ETH.

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Flashbots strategist Hasu called it potentially the “most important Lido upgrade ever,” highlighting its significance in decentralizing influence over the protocol.

As Ethereum’s largest liquid staking provider—managing roughly 27% of all staked ETH—Lido’s move could redefine how major DeFi projects balance control between token governance and liquidity participants.

Alexander Stefanov