Lido DAO Enables Dual Governance, stETH Holders Can Trigger ‘Rage-Quit’ Mode - Unchained

Lido DAO, the governing body of Ethereum’s largest liquid staking protocol, passed a proposal to enable a dual governance system.

The proposal, which passed the main phase with votes almost unanimously in favor, grants ETH stakers – those holding stETH tokens – veto power over governance decisions. It will take effect unless participating LDO token holders either vote “no” or reverse their earlier “yes” votes during the objection phase, which ends at 10 a.m. ET on Monday.

Under the new system, stETH holders can now object to DAO proposals by depositing stETH into an escrow contract. If at least 1% of the total staked ETH in Lido is deposited, the proposal will be delayed for an initial five days.

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If the amount of stETH locked in dissent reaches 10% of the total staked ETH, the proposal will be frozen and the protocol will enter a “rage-quit” state, preventing new proposals from executing until the issue is resolved.

The mechanism is designed to protect stakers from decisions by LDO token holders that could negatively impact them or the Ethereum network, creating a system of checks and balances.

“One of the most well thought-out and complex governance designs in the history of Ethereum, and all onchain minimizing trust,” wrote kadmil, a member of the Lido community on the protocol’s governance forum.

“By implementing dual governance, Lido has effectively solved the agent–principal problem – a major step forward and a great example of regulating code through technology,” said Konstantin Lomashuk, co-founder of Lido on X.