LIP-28 Dual Governance

[kadmil]

The Dual Governance is a dynamic timelock mechanism allowing stETH holders to exit Lido on Ethereum in face of contentious Lido DAO governance motion. Given the dynamic nature of Ethereum staking, usual timelocks aren’t a feasible solution.

Dual Governance introduces timelock contract between Lido DAO governance motions and execution. The timelock is connected to escrow, allowing stETH holders to voice their intention to exit the protocol by depositing stETH, wstETH and stETH withdrawal NFTs into a specific escrow contract. Once the amount locked there crosses the “first seal” threshold (proposed to be 1% of Lido on Ethereum TVL), the timelock duration starts growing proportionately. As the amount locked crosses the “second seal” threshold (proposed to be 10% of Lido on Ethereum TVL), the rage quit mechanics is triggered: execution of any motions under Dual Governance is blocked until all the stETHs in escrow are withdrawn to ether.

Dual Governance allows for de-escalation between stakers and the DAO: stakers could withdraw stETH from the escrow until rage quit is triggered, and DAO governance could cancel the contentious motion queued in the Dual Governance. The Dual Governance design mitigates a number of potential misuse scenarios along this basic flow.

The Lido Improvement proposal outlines the design, specification, parameters pick, deployment plan and operational concerns regarding the Dual Governance.

WIP, link to be changed: lido-improvement-proposals/LIPS/lip-28.md at 19aa2a3c9b1f6ebd4ea6914a91422faaef1f71a8 · lidofinance/lido-improvement-proposals · GitHub

[Hasu]

So incredibly excited for DG to ship!

[Leuts]

One of the most well thought-out and complex governance designs in the history of Ethereum, and all onchain minimizing trust.

Chapeau. Let’s go!

[MF_DROO]

Excited for dual governance, it’s been in the works for a long time.
Faded by ‘OGs’ and the twitter ‘normie-core’ audiences alike for what feels like eons…

LidoDAO has the chance to be the shining example for not only other DAOs, but possibly even trail-blaze a new societal anti-class.

Global democracy and open governance is quietly regressing.
At the same time, this open-experiment has the capacity to empower ETH a more democratizing value settlement layer-- a more open forum.

I believe in the contributors that are humbly and quietly working in the background to make this happen; when you’re doing the right thing, you’re never doing the wrong thing.
For what it’s worth, I think you’re doing the right thing.