Lido, the largest player in the rapidly growing liquid staking sector, is currently pushing a proposal to move to a dual governance model. This challenge is to help stETH holders, part of the Ethereum staking ecosystem, to have more power. This proposal represents a big step towards increased decentralization and more user involvement in the governance of Ethereum staking. Of course, Lido has a significant amount of power in the decentralized finance (DeFi) world. This update has the potential to set far-reaching impacts across the entire DeFi space.

As it currently stands, Lido makes up more than 25% of all staked ETH. This dominance serves as a reminder to all of us how much power the platform has and how its governance-related decisions can affect the entire Ethereum ecosystem. The proposed dual governance model would create a more balanced distribution of decision-making power. Undoubtedly, this change provides stETH holders with a more robust say in how the platform is governed and how it moves forward.

In the aftermath of the announcement, the price of Lido’s native token LDO surged, jumping by 6.5%. This was well ahead of the CoinDesk 20 Index’s increase of 2.5%. This shows the overwhelming positive market sentiment about the governance proposal and the benefits that it promises to deliver to LDO holders.

This upgrade in governance comes at a time of renewed momentum for Ethereum’s staking platforms, encouraged by the expected Pectra upgrade. Pectra is anticipated to have general positive improvements across our collective network efficiency and functionality. The upgrade includes a number of mechanisms specifically aimed at protecting the interests of stETH holders. If deposits into Lido surpass 1% of total staked ETH, an execution delay will be activated. Once deposits increase to 10%, a sort of “rage quit” detour is triggered. This halts all production, thus providing disgruntled stakers an opportunity to leave the network.