Monday, February 26, 2024

LIDO Wants To Reform Voting With Dual Governance Model

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LIDO wants to reform voting with a dual governance model on its platform and both LDO and stETH holders can have a say in the development decisions if this happens so let’s read more today in our latest cryptocurrency news.

The Lido community considers a new approach to protocol decision-making called dual governance and right now, only LDO holders can vote on the decisions as the new approach will give the holders veto rights as well. The plan is also looking to solidify parts of the protocol by placing them outside of the control of the Lido DAO. The community is now discussing a change in governance that will utilize both the protocol tokens.

LIDO wants to reform the governance model and all of the holders could have a governance role. The community suggested a new approach called dual governance which aims to resolve conflicts of interest between eth and LDO token holders. The proposal wants to introduce a dispute and a resolution mechanism for misaligned incentives by giving the assets a role to play in the governance decisions. Only those that hold the LDO token have the right to take part in the governance and this means that the LDO holders will have collective control over the technical aspects of the protocol. As such, they can collude to upgrade the stETH contracts in a way that will exploit the stETH holders.

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stETH tokens are distributed to users that deposit eTH and are meant for use on DEFI services so the new proposal will add an additional governance role for these assets. The tokens will hold veto and anti veto powers and give holders the ability to counter the decisions of the DAO. The approach could create a checks and balances system that is seen in many government around the world which rely on separation of powers to prevent harmful decisions from becoming law. In addition to introducing the dual voting system, the proposal aims to reduce the scope of governance via ossification which means the proposal will solidify some of the parameters of the protocol.

The ossification will not be possible right away and the proposal will have to focus on dual governance at first. Lido’s lead smart contract developer Sam Kozin put forward a concept for dual governance and the team has to create a more technical version of the proposal before the vote happens so no date for voting has been announced yet. The proposal has been well-recieved in the Lido community as the co-founder Cobie stated that the goal of LIDO should be to minimize the ability to influence over time. He added that this will also relinquish the power and will result in the highest growth and longevity potential.

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