Lido Finance, the largest Liquid Ethereum ignition platform by locked value, has introduced a proposal that grants Ether’s direct voting holders (STETH) alongside existing DAO tokens holders.
The upgrade, nicknamed the Lido improvement proposal (LIP) 28, describes a double governance system allowing STETH holders – those who put ETH via Lido and receive a liquid token in return – participate in a veto mechanism on key protocol decisions. Currently, only holders of Ldo$1.08The Lido governance token, said how to evolve the protocol.
As part of the new system, STETH holders could oppose its veto to certain proposals approved by LDO tokens holders, although the veto would not allow them to push proposals through unilaterally.
Double governance: coming soon
Years in manufacturing, Lido Dao contributors are proud to present an overview of the next version of Dual Governance with design and code choices, parameters, deployment and deployment.https: //t.co/iu7jcrcr
– lido (@lidofinance) May 9, 2025
The proposed system is formulated as a mechanism to increase responsibility and decentralization, especially since Lido continues to dominate the landscape of Ethereum. More than 25% of all ETH is Jacqué on the network which crosses its infrastructure.
How does it work
The double governance system adds a special timerlock contract between Lido Dao’s decisions and their execution, giving STETH holders a way to intervene if they are strongly opposed to a proposal.
The locking of “dynamic” time is necessary because it is the way in which governance on the chain technically works behind the scenes.
In the current system, decisions do not take effect immediately, because there is a defined period before being executed. This gives users time to react if they do not agree with certain modifications.
However, Ethereum’s staggered is different because you cannot quickly destroy or remove the ETH, even with the current timelock. It takes time, liquidity is complex and there is often a queue that could take several days to erase.
The new proposal wants to tackle this.
The dynamic timer proposed assumes that, as an exhale, which is not satisfied with a proposed change, deposit their steth (or wrapped in STETH and the withdrawal of NFT) in a contract of entire designated for withdrawal, the duration of Timelock begins to increase – which is called Crossing the “first seal” (fixed at 1% of the total of Lido Teth).
If the dissatisfaction continues and the deposits cross the “second seal” threshold (10% of the Lido ETH TVL), a “rabies stop” is triggered: the execution of the DAO decision is completely blocked until all the Protestant stakers have had the chance to withdraw their ETH.
This creates a kind of security valve – allowing stakers to point out the objection and the exit – while giving the DAO time to respond or cancel the disputed action.
The plan comes then that Ethereum has increased by more than 30% in last week, jumping the momentum from its Pectra upgrade, which introduced reforms of the execution layer to improve scalability and efficiency.
The rally has aroused renewed attention to Ethereum native applications like Lido, which is essential in the capital flow and the participation of the validator through the chain – and has a direct impact on the structure of the ETH market.
The LIP-28 proposal is still in its discussion phase, with an official chain vote expected in the coming weeks.
If it is approved, the change could change the way governance is distributed through the Ethereum ignition ecosystem, the creation of a previous one for other DEFI protocols seeking to include users, not just tokens holders, in decision -making. The other Lido competitors include Rocket Pool and Frax Ether.
LDO prices have increased by 6.5% in the past 24 hours, while the Coindesk 20 index, a wider market gauge, has climbed by 2.5%.
Read more: Ethereum activates the upgrade of “pectra”, increasing maximum participation to 2,048 eTH
