On June 30, 2025, the Lido DAO community approved and activated the Dual Governance system on the Ethereum mainnet. This innovation represents a paradigm shift in decision-making management and in protecting users who entrust their ETH to the Lido protocol, the leading staking service on Ethereum.
Lido DAO: a pillar of DeFi on Ethereum
With approximately 23 billion dollars in ETH deposited – equal to about 26% of all Ether in staking – Lido DAO confirms itself as one of the most influential players in the Ethereum ecosystem. Until today, the governance of the protocol was entrusted exclusively to the holders of LDO, the governance token of Lido.
This model, although effective, left a critical point uncovered: users who hold stETH (the liquid token received in exchange for ETH staked) did not have direct tools to oppose or react to potentially harmful changes decided by the governance.
Dual Governance: what it is and how it works
The new Dual Governance model introduces an unprecedented structure in DeFi. While keeping the proposal power in the hands of LDO holders, the reform provides stakers – that is, the holders of stETH and wstETH – with concrete tools to defend their interests.
The main innovation consists in the possibility, for stakers, to delay the execution of governance proposals and, in case of strong disagreement, to exit safely from the protocol before the changes are applied. In practice, if at least 1% of all stETH holders oppose a proposal, the execution is suspended for a minimum period of five days, extendable up to 45 days based on the level of dissent expressed. This pause period serves to foster thorough community debate and to allow for further checks.
If the dissent reaches 10% of stETH holders, the so-called rage-quit mechanism is triggered: the execution of the proposal is completely blocked until all opposing stakers have had the opportunity to withdraw their ETH from the protocol. This system ensures that no change can be imposed against the will of a significant part of the staker community, strengthening the resilience against malicious governance attempts.
An unprecedented security model
According to Sam Kozin, core contributor of the Lido Labs Foundation, “Dual Governance is a milestone for the security of DAOs and the sharing of power. It offers stakers truly applicable exit rights, allowing the community to respond with deliberation instead of impulsive reactions. The design fully embodies the core values of Ethereum: decentralization, user sovereignty, and credible neutrality.”
The security of this new model has been guaranteed by thorough audits conducted by leading entities such as Certora, OpenZeppelin, Statemind, and Runtime Verification. Additionally, the system parameters have been subjected to agent-based simulations (CollectifDAO) and game theory models (20squares), further confirming the solidity and robustness of the adopted solution.
Impacts on decentralization and institutional robustness
The introduction of Dual Governance represents a fundamental step forward for the decentralization and predictability of governance on Lido. The stakers, who represent the beating heart of the protocol, finally gain a direct and onchain channel to make their voices heard and, if necessary, to protect their assets from potentially harmful decisions.
This balance between decision-making power of LDO holders and opposition rights of stakers makes the protocol more robust and less vulnerable to manipulation attempts or governance attacks. In a context where trust and security are central elements, Lido DAO’s move stands as an example of best practice for the entire decentralized finance sector.
A new standard for on-chain governance
The adoption of the Dual Governance model by Lido DAO marks a turning point not only for the protocol itself, but for the entire Ethereum community. The initiative demonstrates how it is possible to combine innovation, security, and democratic participation in a rapidly evolving ecosystem.
With this reform, Lido DAO strengthens its position as a leader in Ethereum staking, offering users greater guarantees and protection tools. Onchain governance, from today, is no longer just a matter of votes, but of concrete rights and protection of the community’s interests.
In a sector where the stakes are extremely high – with billions of dollars at stake and the trust of millions of users – Lido DAO’s choice to focus on transparency, security, and decentralization could become the new standard for all DAOs and DeFi protocols of the future.