Definitely agree that stETH veto voting doesn’t need to be included in the delegation mechanism. Veto power held by stETH should be act as a guard of the governance system, which does not need to be frequently used.
On the other hand, it introduces one more dimension to the principal-agent problem and increases centralization risks of the governance, so it should be explored with caution especially given the current concerns around the LDO governance risks.
Could delegation mechanism raise the centralization risks? Yes, it does. But, based on the current $LDO token distribution conditions, the room of increase centralization risks is quite small.
https://dune.com/chuck/lido-governance
Now the top 95 $LDO holders( including dex pools & cex wallets), which own at least 1M $LDO token, hold more than 93% voting power. All the rest as a whole just represented less than 7% voting power, which just a little surpassed the voting threshold. That’s why Lido governance now and then has been criticized as a centralized governance. The delegation mechanism may somehow reduce the gap and empower some of the community members to more actively participate in the governance process. We should avoid the tragedy of “the abandoned mid-west”.