Lido introduces revolutionary dual governance to empower stETH users to delay or veto proposals.

[Coin World] Lido DAO is finally going to implement "dual governance". A vote targeting LDO holders will end at 10:00 AM Eastern Time on Monday, June 30, which will decide whether to change the power distribution mechanism in the largest liquidity staking protocol on Ethereum. If approved, the proposal will activate a new framework that gives stETH holders (users who stake Ether through Lido) a formal mechanism to delay or veto governance actions, adding a new layer of accountability to the voting system. According to renowned researcher and advisor Hasu, this new technical mechanism has implications for the entire crypto space, not just Lido. "Lido has truly reduced the risks users face from any type of governance attack, and their trust in the maintenance of the company and LDO holders," Hasu stated. The team expects this to further promote institutional adoption of stETH.

The core of dual governance is a customized dynamic time-lock module. Unlike a static time-lock that only delays execution for a fixed period, this design extends based on the objections registered by stETH holders. For example, if 1% of the total stETH supply expresses opposition to a proposal, the execution will be delayed an additional five days. If the opposition increases to 10%, the delay will be linearly extended to 45 days. This mechanism ensures that if LDO token holders make controversial or potentially harmful decisions, stETH users can have a predictable exit window before changes take effect. This is unprecedented in governance systems, but it is absolutely essential for Lido as it takes into account the variability of Ethereum staking withdrawal queues.

This idea stems from the core contradiction between providing liquidity and minimizing trust assumptions. Liquid staking protocols essentially rely on pooled delegation and active protocol maintenance to remain compatible with Ethereum upgrades. We saw this in the debate regarding the latency of the Pectra upgrade, where Lido's Ivan Metrikin played a key role in the decision-making process of All-Core Devs. While traditional timelocks give users the opportunity to exit before governance decisions take effect, exiting Lido and returning to native Ether can sometimes take weeks or months, making shorter fixed terms inadequate. Dynamic timelocks aim to bridge this gap by adjusting execution delays to match the scale of user dissent, rather than applying a one-size-fits-all latency. Simple or uncontroversial changes can be passed quickly, while if large stETH holders begin to dissent, the governance system will automatically hit the brakes.

Contributors of Lido, including Hasu and Victor "kadmil" from the DAO operations team, acknowledge that the design has taken years to develop and incorporates dedicated stress testing to ensure it can withstand governance attacks and flash loan manipulation. "We have paid people to try to break this design using flash loans," Victor stated, and then made adjustments, "to make it resistant to flash loans." The wrapped version of stETH (such as the version used in EigenLayer restaking or Pendle yield strategies) is not eligible for direct voting, but the withdrawal process allows holders time to reclaim their underlying stETH and participate when needed. Hasu explained that this is to enable users to gain liquidity while retaining exit rights in a way that other protocols cannot manage.

"In the past, there was a dilemma between trust and liquidity, and dual governance effectively breaks this dilemma," he said. "You no longer have to choose—you can have both." The initiative has been compared to MakerDAO's "emergency shutdown" leverage, but the difference is that it offers a non-destructive, progressive response rather than a single catastrophic reset. It also reflects a broader trend in DeFi governance towards a more nuanced, multi-stakeholder system that separates capital voting from user protection. Hasu expects that Lido's implementation will serve as a blueprint for other protocols facing similar governance risks.

The previous Snapshot vote on the proposal was almost unanimously approved. If the on-chain Aragon vote passes as expected, it will formally separate the power to propose and pass measures from the power to execute them immediately, effectively placing stETH holders in the role of constitutional overseers of the DAO. As of 9:00 AM Eastern Time on Friday, only 4% of token holders participated in the vote. To pass, the on-chain Aragon vote requires at least a 5% quorum.