Lido Finance, the largest liquid bet platform in Ethereum by blocked value, has introduced a proposal that gives Ether headlines (Steth) the direct voting power along with existing DAO token tokens.
The update, the proposal to improve Lido (LIP) 28, describes a double governance system that allows Steth holders, those who acquire ETH through Lido and receive a liquid token in return, to participate in a veto mechanism in the key protocol decisions. Currently, only holders of Ldo$1.08The Lido governance sheet has something to say about how the protocol evolves.
According to the new system, Steth headlines could veto certain proposals approved by Ldo tokens, although the veto would not allow them to boost the proposals through unilaterally.
Dual governance: soon
Years in creation, Dao Lido taxpayers are proud to present a scheme for the next launch of Dual Governance with design and code options, parameters, implementation and deployment.
– Lido (@lidofinance) May 9, 2025
The proposed system is framed as a mechanism to increase responsibility and decentralization, especially since Lido continues to dominate the Ethereum landscape. More than 25% of all ETH is bet on the network that runs through its infrastructure.
How it works
The dual government system adds a special Timelock contract between DAO Lido decisions and its execution, giving Steth holders a way of intervening if they firmly oppose a proposal.
The “dynamic” time block is necessary because it is how governance in the chain works technically behind the scene.
In the current system, decisions do not come into force immediately, since there is an established period before they are executed. That gives users time to react if they do not agree with certain changes.
However, Ethereum stking is different because you cannot disapprove quickly or remove ETH, even with the current timelock. Time is needed, liquidity is complex, there is often a tail that could take several days to clear.
The new proposal wants to address that.
The proposed dynamic timelock assumes that, as enough users, who are not satisfied with a proposed change, they deposit their Steth (or Steth wrapped and withdrawal of NFT) in a deposit contract designated for removal, the duration of time begins to increase, this is called to cross the “first seal” (established in 1% of the total ETH Lido).
If the discontent continues and the deposits cross the threshold of the “second seal” (10% of the Lido eth tvl), a “waiver of anger” is triggered: the execution of the DAO’s decision is completely blocked until all the Protestant stakeholders have had the opportunity to withdraw their eth.
This creates a kind of safety valve, which allows stakers to point out the objection and exit, while giving the DAO time to respond or cancel contentious action.
The plan occurs when Ethereum has increased more than 30% during the past week, driving the impulse of its song update, which introduced the reforms of the execution layer to improve scalability and efficiency.
The rally has caused renewed attention in Native Ethereum applications such as Lido, which is critical of capital flow and validator participation throughout the chain, and directly impacts the structure of the ETH market.
The LIP-28 proposal is still in its discussion phase, with a formal vote in the chain in the coming weeks.
If approved, the change could change the way in which governance is distributed in the Ethereum rethink ecosystem, establishing a precedent for other protocols that seek to include users, not only to the tokens mayors, in decision making. The other Lido competitors include Rocket Pool and Frax Ether.
LDO prices have increased 6.5% in the last 24 hours, while the Coindesk 20 index, a broader market meter, rose 2.5%.
Read more: Ethereum activates the ‘sick’ update, raising the maximum stake at 2,048 eth
