Lido Finance, Ethereum’s largest liquid evaporation platform, has proposed a proposal that grants fixed Ether (Steth) holders the right to vote directly with the existing DAO Tokenholder.
The upgrade, called Lido Improvement Recommendation (LID) 28, outlines a dual governance system that allows Steth Holder (the person who promotes ETH through Lido and obtains liquid tokens in return) to participate in the veto mechanism of key protocol decisions. Currently, only LDO$1.06a favorable governance token, has a say in the development of the agreement.
Under the new system, Steus holders can veto certain suggestions approved by LDO token holders, although the veto cannot unilaterally push the proposal.
Dual Governance: To be Launched
During the production process, Lido Dao contributors are proud to be the overview of the upcoming dual governance releases, which include design and code selection, parameters, deployment and rollout.https://t.co/iu7j1colcr
– lido (@lidofinance) May 9, 2025
The proposed system is constructed as a mechanism to increase accountability and decentralization, especially when Lido continues to dominate the piled landscape of Ethereum. Exceed 25% of all ETH Placed on a network running through its infrastructure.
How it works
The dual governance system adds a special timeline contract between Lido Dao’s decision and enforcement rights, which provides Steth Holders with a way to intervene if they strongly oppose the proposal.
“Dynamic” time locking is necessary because this is how chain governance works technically behind the scenes.
In the current system, decisions do not take effect immediately because there are certain stages before execution. If users disagree with certain changes, this gives them time to react.
However, Ethereum’s occupancy is different because even the current schedule cannot quickly delete or withdraw ETH. This takes time, liquidity is complex, and usually there is a queue that can take several days to clear.
The new proposal hopes to solve this problem.
The proposed dynamic time track assumes that as sufficient users, users who are unhappy with the proposed changes deposit their steth (or packaged steth and nfts withdrawal) into a designated custody contract for withdrawal, and the time Soloke duration begins to increase – this is called “over the first seal” (fixed at 1% with total Lido Eth).
If dissatisfaction continues and continues the “second seal” threshold (10% of Lido’s ETH TVL), an “angry exit” is triggered: the decision to execute the DAO will be blocked completely until all protesting Stakers have a chance to withdraw their ETH.
This creates a safety valve – allowing Stakers to signal opposition and exit while still giving DAO time to respond or cancel controversial actions.
The plan is because Ethereum has soared more than 30% over the past week and is waving momentum from its pectra upgrade, which introduces execution-level reforms to improve scalability and efficiency.
The rally has sparked new attention to new applications of Ethereum, such as Lido, which is crucial in capital flows and validator participation throughout the chain and directly affects the ETH market structure.
The LIP-28 proposal is still in discussion phase and formal chain votes are expected in the coming weeks.
If approved, this change could change how governance is allocated in Ethereum’s stacked ecosystem, setting precedents for other procedures seeking to include users in decision-making, not just tokens. Lido’s other competitors include Rocket Pool and Frax Ether.
LDO prices have risen 6.5% over the past 24 hours, while the Coindesk 20 index (a broader market scale) has risen 2.5%.
Read more: Ethereum activates ‘pecttra’ upgrade to increase its largest stake to 2,048 ETH
