First of all, I would like to thank the authors for the work they put into design. It’s well thought through and clearly took a lot of effort to put together. I’m in no way an expert on governance models. The following points are from my perspective as a curious community member, node operator and active LDO governance participant.
1. The VetoSignaling Escrow vs. DEFI
I still consider one of the main usages of LSTs to be used in DeFi. Having to move my stETH from e.g a liquidity pool to the escrow to signal my unhappiness with DAO decisions seems not like a great oracle for stETH holder sentiment over all.
I only see this happening for significant proposals where the stETH holders feel the DAO is strongly going against them in which case I would assume most holders to rather use the good liquidity of stETH to exchange them for another LST or native ETH to quickly exit.
Another point to consider here might be tax implications: In several jurisdictions, there’s a substantial tax distinction between stETH and wstETH. Unwrapping wstETH to join the VetoSignaling Escrow might trigger an expensive, taxable event.
2. VetoFirstSealThreshold
The initial suggestion for this threshold is set to 1% of the current stETH supply. Already looking at regular governance, we can see how hard it is to get people to send a simple transaction for a proposal (even at no gas cost if it’s a snapshot).
With 41% of all stETH in wstETH alone,I envision a massive exit or “bank run” preceding such significant movement to the VetoSignaling Escrow Contract.
Of course, this doesn’t speak against the process itself, but I think an emphasis on this should be taken in the next steps pointed out. (Especially since if the threshold instead would be set too low, it might create a risk of LST competitors using the mechanism to slow down Lidos governance significantly).
3. The evolution of LDO
As a LDO holder, I’m keen to get your point of view how the significance of LDO will (and should) evolve over time, especially considering this dual governance model. If we’re shifting to increased protocol ossification, and concurrently reducing governance activities, LDO in its current design will lose most of its appeal as a governance token. A profit share to give LDO continued value seems like the only feasible solution to me.
Obviously, there is a long road ahead of us before the protocol will get there, but I think it is important to already discuss the future of LDO while planning ahead.
4. Role of Node Operators in Governance:
The document briefly touches upon the role of node operators in governance. I believe that node operators should be more integrated into this process. Beyond just a tie-breaker sub-committee, we should explore mechanisms to engage ALL node operators actively. Given that the protocol isn’t near governance minimization and with current voting turnout being modest, we can use all the voters we can get. Considering the benefits node operators derive from Lido, as well as the nature of their business requiring some sort of day-to-day involvement anyways, this step seems both logical and imperative.
In conclusion, I’m largely supportive of the dual governance design proposition and are hopeful for further insights.