Consider Sarah, a single mother who responsibly IRL stakes her ETH with Lido. She's not a whale, just a believer in Ethereum's promise. She often finds that her voice is an echo in a coliseum of LDO loudspeakers. Sarah's story isn't unique; it's the reality for many stETH holders who've felt sidelined in Lido's governance. Is that about to change?

Forgotten Voices Heard At Last?

As we’ve seen in governance around the world, for too long, DeFi governance has been dominated by token whales. It’s the digital equivalent of a town hall meeting where only the richest plantation owners are allowed to testify. Lido, the largest participant by a large slice of the Ethereum staking pie (more than 25%), has been among them. This kind of imbalance is patently unfair. In each instance, it undermines and creates animosity toward the very core principles of decentralization that crypto is supposed to uphold.

LIP-28, Lido’s proposed dual governance system, has the potential to be a governance game-changer. It’s not the end of the line revolution, but it is an important step towards making the playing field a little more even. The core idea is simple: give stETH holders a veto right over proposals approved by LDO token holders. This functions as a political safety valve. Second, it prevents decisions that would benefit LDO whales at the peril of the bigger stETH ecosystem and users such as Sarah.

One small stETH holder told me, "I've always felt powerless. The big LDO holders make decisions that affect my stake, but I have no real say. This veto power, even though it's just a veto, feels like I finally have a seat at the table." This contrasts with a comment from a large LDO holder (who wished to remain anonymous): "This could slow things down. StETH holders might block crucial upgrades just because they don't understand the complexities."

The reality is, LDO holders don’t need to feel this is a dilution of their power. And perhaps it is. Power should not be so highly concentrated in the hands of a few, particularly in such a decentralized ecosystem.

That’s the loveliness of the veto power — it keeps any side from acting alone. If it passes, then stETH holders do not gain the ability to push their own proposals to a vote, merely the ability to stall decisions they consider damaging. This is not some radical call for the left to re-seize power, this is basic checks and balances. It's like the US Senate: a body designed to prevent the House of Representatives (representing the majority) from running roughshod over the interests of smaller states.

Staked ETH Veto Power Fair?

Lido’s proposed dynamic timelock is an important additional provision. It acknowledges the time and complexity involved in unstaking ETH. This often provides users an opportunity to react to a proposed amendment they don’t like. This is vital. Consider, for example, a hypothetical rapid change to Lido’s fee structure forced by LDO holders. Without a timelock, stETH holders would be forced to either accept the change or undergo the lengthy and costly process of unstaking. The timelock provides a much-needed buffer.

This echoes the sentiment of financial advisors urging investors to maintain liquidity. It's not just about returns; it's about having the freedom to exit when necessary. The timelock gives stETH holders that freedom.

Though still in the discussion phase, a formal on-chain vote on LIP-28 should happen in the coming days. This is where you come in. Whether you’re a stETH holder or just interested in decentralized governance, this is the moment to pay attention and make your voice heard.

Will This Power Shift Last?

Don't let this opportunity slip away. This isn’t solely about Lido. More than just EIP-1559, it’s about creating a precedent for more inclusive, more decentralized governance across the entire Ethereum ecosystem. Competitors Rocket Pool and Frax Ether, Lido’s competitors, are studying very closely. If Lido is successful in making its stETH holders whole, look for them to be copied by others.

Once again, don’t forget about Sarah, the single mom who’s staking her ETH to help secure the network. She embodies the hundreds of thousands of people who see the promise that DeFi holds but feel left out of the decision-making process. LIP-28 offers a chance to change that.

This isn’t simply about one vote. This is all about the future of DeFi. It’s about having each and every stakeholder’s voice, including the smallest and most impacted, heard and counted and not just the loudest or the wealthiest being present. Let’s do it, and create a more equitable and decentralized future in the process, vote by vote.

Don't let the whales decide your fate. Your stake, your voice, your vote. Use it.

  • Research LIP-28: Understand the proposal and its implications.
  • Join the Discussion: Participate in Lido's governance forums and share your thoughts.
  • Vote: When the on-chain vote is held, cast your vote and make your voice heard.

This isn't just about a vote; it's about shaping the future of DeFi. It's about ensuring that the voices of all stakeholders are heard, not just the loudest or the wealthiest. Let's build a more equitable and decentralized future, one vote at a time.

Don't let the whales decide your fate. Your stake, your voice, your vote. Use it.