Monthly Governance Updates

[Boardroom]

July 31, 2024

Over the course of the next quarter, Boardroom will be supporting Lido DAO by helping to increase the visibility of governance activity. Among our contributions will be bi-monthly governance reports, the first of which we provide below.

We’ve seen some important developments over recent weeks, including the deployment of the Community Staking Module on testnet and the passing of Vote #176, which (among other things) allows for the increase of the staking module’s share limit to 4% of total stake.

Reminder that this week we will see several Snapshot proposals posted (see below).

Proposals

Completed

Vote #176: This on-chain omnibus proposal was executed on Friday, July 26th with 100% voting “YES.” It contained the following two proposals, previously approved via Snapshot:

1. Expanding the Simple DVT Module: This proposal expands the Simple DVT Module by allowing larger clusters of up to 500 validators, called Super Simple DVT Clusters, and increasing the staking module’s share limit from 0.5% to 4%. This aims to enhance validator resilience, security, and decentralization. The proposal includes evaluations and performance reports to ensure reliability and proposes a phased implementation.
2. Lido Contributors Group Funding: This transfers 180,000 LDO within the EGG st2024 v2 Grant Funding to the PML multisig.

Upcoming Snapshots:

Proposals to be posted this coming Thursday (August 1) for a seven day period, following the regular monthly cadence (see calendar here).

Establish a Public Delegate Platform and Delegate Incentivization Program

The DAO Operations Workstream has proposed working with Agora to create a public delegate platform and begin a six-month pilot Delegate Incentivization Program to boost active voting, enhance discussions, and engage new tokenholders. The plan includes building the public platform, establishing a delegate incentivization program with a $150,000 fund, and organizing delegate rallies. Delegates must meet criteria for participation, and a committee will oversee the program. The proposal has generated positive feedback so far and should be moving to a Snapshot vote imminently.

LIP-25: Staking Router v2.0

LIP-25 proposes the Staking Router v2.0 upgrade to enhance Lido DAO’s Ethereum staking. This includes permissionless staking modules and improvements to the Deposit Security Module, Validator Exit Bus Oracle, Accounting Oracle, and reward distribution mechanisms. The goal is to increase security, scalability, and decentralization.

wstETH Deployment on Mode

The Mode core team proposes deploying wstETH to the Mode DeFi hub and transferring ownership of wstETH bridging components to the Lido DAO. Mode has rapidly grown to $700M in TVL and seeks to integrate wstETH to enhance its ecosystem. The proposal includes utilizing the canonical bridge for secure and scalable deployment and requires Lido DAO approval via a Snapshot vote.

Wormhole x Axelar | Lido Bridge: Implementation for wstETH on BNB Chain

The wstETH bridge between Ethereum and BNB Chain mainnets has been successfully deployed and is operational. The bridge awaits Lido DAO’s official endorsement through the upcoming governance vote. The new functionality allows wstETH transfers between the networks. Testnet deployment details have been provided for the BNB bridge as have the results of Cyfrin’s most recent audit of the NTT framework.

In discussion

Rated Labs Replacement in the Oracle Set

Rated Labs will exit the Lido oracle set in Q3 2024 due to rising infrastructure and maintenance costs. Responsibilities will be transferred to a suitable candidate, pending Lido DAO approval, within this period. The current proposal is to rotate from Rated to MatrixedLink since they have already participated in the Lido oracle set testnet.

Contributor & Workstream Updates

Forum post: [EGG] Establishing the Community Lifeguards Initiative (CLI) Sub-Committee

@enti has just posted the 2024 - Q2 Community Lifeguard Report. In Q2 2024, CLI supported CS Fleet pilots, aided SDVT operators, and launched the Community Staking Module on testnet. The community of Lido stakers grew by 80%. CLI activities included roundtables and a meme competition, with further grants awarded for community education and events.

Forum post: Community Staking Module

As of July 15th, the Community Staking Module is fully permissionless on testnet. Become an Ethereum validator with no more than 2 ETH.

Forum post: TMC-1: Pipeline to sell stETH at regular intervals for DAI

@steakhouse provides an update: $11,359,597.69 in stablecoins was raised from 3,300 stETH across three transactions. This is the first successful implementation of the Stonks initiative, which seeks to execute treasury swaps via optimistic governance (see Easy Track motions 675 & 676).

Forum post: Staking Router Module Proposal: Simple DVT

The NOM contributor workstream on behalf of the Lido Node Operator Subgovernance Group provided an update on the Simple DVT Super Cluster evaluations held on July 16, 2024. The evaluations classified Node Operators into Curated, Advanced, and Solo/Community stakers. Seventy participants were recommended for 10 clusters, including seven solo/community stakers and 63 professional operators. An additional 28 participants were proposed as backups.

The NOM workstream also provided the second performance report for the 12 Lido x Obol Cohort 1 clusters active on mainnet via the Simple DVT Module. With improvements across all metrics, it is proposed to raise the key limits to 80 validators in a phased manner. Since May 2nd, metrics include 99.96% average uptime, 96.91% validator effectiveness, and an 86.76% block proposal success rate.

Forum post: Community Staking Fleet: The Mu @ Buenos Aires, Argentina

The Community Staking Fleet Pilot has concluded, providing insights into local crypto communities and their stakers. In Argentina, Lido engaged with the MuBuenos event, conducting staking sessions, supporting educational initiatives, and fostering local engagement. This effort highlighted Argentina’s significant crypto community and the potential for further growth in staking activities.

Forum post: Community Staking Fleet Pilot

@Stakesaurus and @Bitskwela report on the conclusion of the Community Staking Fleet Pilot in the Philippines, noting “fertile grounds for crypto adoption.” The project focused on education and included a solo staking workshop.

Forum post: Create A Centralized Exchange Liquidity Dashboard for $ETH and $STETH & Develop A Strategy to Improve $STETH Liquidity

@Glass_Markets most recent liquidity reports for stETH can be found here.

Community Calls

Node Operator Community Call \#19 took place on July 23rd. Check it out here, or enjoy the recap. Stay tuned for information on next month’s call.

[Boardroom]

August 26, 2024

A few items to highlight this week:

First, on the delegate incentivization program: The proposal to establish a public delegate platform and incentivization program for Lido was passed with full support on August 8th, and interested delegates have posted their applications (i.e. profiles) in the delegate platform thread. Check them out. The Delegate Rally begins today and will run until September 18th.

See our recent Spotlight for an in-depth look at this new program.

Second, Vote #178 has been executed (see below) and on-chain delegation is now live. The UI for easy delegation is expected to be released today, but if you can’t wait, here’s a guide on how to delegate via Etherscan: Etherscan Voting Guide.

Third, on the governance UI: The DAO Operations Workstream has proposed discontinuing the Aragon UI for governance and node management, with support ending by year-end. Users are encouraged to transition to new platforms, vote.lido.fi and operators.lido.fi. If no significant objections arise, the Aragon UI will be shut down. Feedback on the transition and additional feature needs is welcomed.

And lastly, @SEEDOrg has suggested regular governance calls. What say you?

Proposals

Upcoming Snapshots

Proposals to be posted this coming Thursday (August 29th) for a seven day period, following the regular monthly cadence (see calendar here).

Organize the Lido Alliance Program as a Lido-DAO-Adjacent BORG

The proposal from @lex-node outlines the creation of a Lido Alliance BORG, a legal entity incorporated in the Cayman Islands to manage the Lido Alliance Program. The BORG structure is designed to provide legal governance, hold assets, and ensure continuity for the Lido DAO while incorporating autonomous technologies. It requests an initial budget and outlines the roles, governance, and operational procedures of the BORG, emphasizing transparency and checks-and-balances with Lido DAO.

Can Galaxy Continue as Node Operator after Acquiring CryptoManufaktur?

On July 18, 2024 CryptoManufaktur was acquired by Galaxy. There has been a discussion of the implications of this acquisition, particularly regarding potential changes to validator operations, organizational structure, and geographic distribution. The stated focus is to ensure continuity and transparency. The Lido Node Operator Sub Governance Group (LNOSG) will be proposing allowing Galaxy to continue as a Node Operator.

Completed

Onchain

Vote #178: This was a slightly adapted version of #177 (which did not meet quorum). Voting on this omnibus proposal was executed on August 24th. It contains the following three proposals:

1. Replace Rated Labs with MatrixedLink in Lido on Ethereum Oracle set (recently approved via snapshot).
2. Rename Node Operator with IDs 23 (CryptoManufaktur) and 36 (Numic) and update the reward addresses (see forum request).
3. On-Chain Delegation (approved on Snapshot last March). This proposal enhances Lido DAO governance by updating the Aragon Voting contract and the TRP Voting Adapter contract.

Note that Vote #178 was helpfully annotated by the DAO Operations Workstream to make verification of the on-chain steps easy.

Snapshot

Establish a Public Delegate Platform and Delegate Incentivization Program

This proposal passed on August 8th with 100% voting in favor.

LIP-25: Staking Router 2.0

This proposal passed on August 8th with 100% support.

Decision on Rated Labs’s position in the Oracle Set: rotate or remove and change the quorum

One hundred percent voted in favor of rotating MatrixedLink into the oracle set.

Should the Lido DAO recognize the wstETH Bridge Endpoints on BNB as canonical?

Proposal passed on August 9th with 100% support for recognition.

Should the Lido DAO recognize the wstETH Bridge Endpoints on Mode as canonical?

Proposal passed on August 9th with 100% support for recognition.

In discussion

ESPBL: Collective Bargaining for the Lido Alliance

The proposal suggests forming the Ethereum Service Providers Business League (ESPBL) under IRS Code 501(c)(6) to collectively bargain for better pricing for Lido Node Operators. This initiative aims to reduce operational costs, enhance network resilience, and standardize security, potentially saving the Ethereum ecosystem up to $907,200 annually by the fifth year.

Inclusion of SecureRPC.com MEV Relay as a Mandatory Relay in Lido’s MEV Relay List

This proposal recommends making the SecureRPC.com 2 MEV Relay, operated by Manifold Finance, a mandatory relay in Lido’s MEV infrastructure. The relay, currently optional, offers enhanced security with a non-filtering, non-optimistic design and includes a Captive Insurance pool for service outages. The proposal aligns with LIP-17 guidelines, aiming to improve Lido’s MEV operations by integrating this reliable relay.

Contributor & Workstream Updates

Forum post: Community Staking Module

The Community Staking Module LIP (26) has been published on GitHub.

Forum post: Community Grants: CSM Resources

The Community Lifeguards Initiative is offering up to $2,000 in retroactive funding for community-driven resources that raise awareness of the Community Staking Module (CSM) and assist home stakers. Eligible resources include guides, tutorials, and explainers related to CSM setup and usage. Applications are accepted until September 30, 2024, based on quality, usability, and uniqueness.

Forum post: Lido Node Operator MEV Boost min-bid guidance

@Tane posts to indicate the need to further study the impact of the minimum bid on decentralization and base-fee volatility. Key concerns include the unclear relationship between min-bid and censorship resistance, potential base-fee volatility from vanilla blocks, and the trade-offs between decentralization and economic efficiency.

Forum post: LIP-23: Negative rebase sanity check with second opinion

@VictorP posts to say that the LIP-23 proposal has been confirmed feasible and correct by audits from ChainSecurity and MixBytes. The solution will be deployed to Mainnet as part of the Staking Router v2 initiative to reduce operational overhead. Testnet deployments on Sepolia and Holešky are planned for further testing this month.

Forum Post: Lido Community Lifeguards Initiative

@Stakesaurus recommends onboarding StakeCat, a group of seven Ethereum solo stakers, as the European Community Lifeguard within the Lido Community Lifeguards Initiative, citing their expertise and contributions to the solo staking community.

Forum post: Staking Router Module Proposal: Simple DVT

The update reports strong performance of the Lido x SSV Cohort 1 clusters and proposes raising their validator key limits to 40 in phases. It also suggests increasing Cohort 2’s limits to 5 validators after onboarding.

See the related blog post from Lido on recent developments with the Decentralized Validator Vault (developed by Mellow): the Vault aims to increase Distributed Validators within Lido’s Simple DVT Module, enhancing decentralization, security, and network resilience. The Vault allows stakers to earn rewards from stETH and DVT incentives, with a target of 11,868 validators.

[Boardroom]

October 1, 2024

Hello everyone! We’re back with the latest updates for you. Let’s dive in.

🪿A new GOOSE cycle has begun, with the aim of setting one- and three-year goals for the DAO. Key dates:

• Notice Period: Sept 24–Oct 8
• Proposal submission Period: Oct 8–Nov 9
• Discussion Period: Begins Nov 9, followed by voting

The Delegate Oversight Committee has decided to use the start of the upcoming vote period (Thursday, October 3rd, 4PM UTC) as the cutoff point for the list of incentivized delegates. You can Delegate your LDO until then.

The latest Node Operator Community Call took place last week, check it out.

Snapshot proposal coming your way this week, and on-chain proposals next week.

Proposals

Upcoming Snapshots (Oct. 3)

Proposals to be posted this coming Thursday for a seven day period, following the regular monthly cadence (see calendar here).

Lido Community Staking Module Mainnet Release

Lido Community Staking contributors are requesting approval from Lido DAO members for the mainnet release of the Community Staking Module (CSM) on Ethereum. The CSM is a permissionless staking module featuring entry with an ETH bond, non-linear bond scaling for node operators, and a first-in, first-out stake allocation queue. It has demonstrated strong performance on the Holesky testnet. Approval would encompass the use of the current CSM implementation, acceptance of deployment parameters (excluding the early adoption list to be proposed later), and delegation of specific management responsibilities to the CSM committee’s multi-signature wallet.

Upcoming On-chain (Oct. 8)

LIP-22: stETH on L2

The proposal recommends creating a rebasable stETH token on Ethereum Layer 2 networks by wrapping wstETH, effectively producing a canonical version of stETH (‘wrapped twice’). This approach streamlines transferring stETH across rollups using existing wstETH infrastructure and liquidity on L2 networks. It explores upgrading the wstETH bridge on Optimism as a practical example. Implementing rebasable stETH on L2 unlocks new use cases such as accurate staking and withdrawal accounting, token gas payments, and cross-domain deposits, enhancing user experience as activity shifts from L1 to L2.

See the upgrade announcement and action plan here.

Organize the Lido Alliance Program as a Lido-DAO-Adjacent BORG (Easy Track Factory)

This proposal derives from the recently passed Snapshot to create a Lido Alliance BORG Foundation to manage the Alliance workgroup and involves adding an Easy Track factory to the registry of factories.

In discussion

Onboard Bolt to the Lido Alliance

Bolt is proposing to join the Lido Alliance to enhance Ethereum block proposals by enabling credible commitments about block contents, starting with the inclusion preconfirmations. The goal is to improve Ethereum’s user experience and censorship resistance while aligning with Lido DAO’s values. Bolt seeks endorsement, integration support, and collaboration from Lido, including participation from Lido Node Operators in its testnet.

Adjusting Delegate Incentivization

@Tane proposes to enhance the existing delegate program by implementing a 30-point scoring system with criteria based on voting participation, forum engagement, and successful proposal authorship. They argue that the original objectives, which mainly focused on increasing voting participation, discussion quality, and protocol safety through community engagement, were not met by the current program. The proposal suggests removing the objective related to engaging new token-holders via delegation as it requires different approaches. Inspired by other DAOs like Compound and Uniswap, the proposed program would focus on rewarding delegates for their active contributions, aiming to create a more effective governance process.

Council Daemons Funding

This post discusses a funding proposal for the off-chain infrastructure component of the Deposit Security Module (DSM), referred to as Council Daemons. With the upcoming Staking Router v2 update, Council Daemons will manage additional transactions related to keys unvetting, ensuring deposit queue security. The proposal also includes a migration from RabbitMQ to a decentralized data bus using smart contracts on EVM-compatible chains, enhancing fault tolerance but increasing transaction fee costs. Estimated costs include up to 1 ETH per month for unvetting key transactions and an annual $10,000 for the decentralized data bus transition.

Optimizing Lido On-chain Voting Timelines for Inclusive Governance

@Tane suggests extending Lido’s on-chain voting period from 72 to 192 hours to enhance governance participation. The new timeline includes a 120-hour main phase (Tuesday–Saturday) and a 72-hour objection phase (Sunday–Wednesday), aiming to reduce missed votes and improve quorum attainment, aligning with other DAOs’ practices.

Increase the Proposal Threshold for Snapshot

This proposal suggests increasing the Snapshot proposal threshold for Lido DAO from 1,000 LDO to a range of 5,000 to 15,000 LDO. This change aims to mitigate spam and low-quality submissions, promoting more thoughtful and impactful proposals. Currently, Lido’s low threshold makes it vulnerable compared to other DAOs like ENS, Uniswap, Aave, and 1inch, which have significantly higher thresholds. The proposal also considers alternative measures like enhanced admin rights and whitelisted authors, though these may conflict with decentralization principles.

LEGO Proposal: Economic Viability and Securing of Preconfirmations

This post outlines a proposal by Conor McMenamin on behalf of Nethermind to secure funding for a project aimed at analyzing the economic viability and security of preconfirmations. The project, funded by a 100,000 USDC LEGO grant, will be carried out over three months. It will investigate whether preconfirmation protocols are economically viable for transaction proposers and how they can be secured to provide reliable transaction guarantees. The proposal consists of two main deliverables: a thorough analysis of the economic aspects and a framework for securing preconfirmations.

Contributor & Workstream Updates

Forum Post: Staking Router Module Proposal: Simple DVT [node upgrade]

Massimo from the SSV core team announces the upcoming “Alan Fork” node upgrade (“a big one”), which introduces committee-based consensus and efficient network messaging. The testnet launch was on September 24, 2024, with a tentative mainnet rollout around October 20th, pending testnet results.

Forum post: RockLogic Monthly Notes

In the latest RockLogic Monthly Notes, the team shared a comprehensive update on their ongoing projects and infrastructure advancements. Highlights include the successful setup and support of various SSV and OBOL mainnet clusters, proactive measures in addressing Nimbus block production issues, and regular maintenance for Validator Ejectors. Additionally, they reported significant achievements in node upgrades and infrastructure tuning across multiple testnets, alongside a commitment to continuous monitoring and support through their Discord server. Efforts to maintain security and performance through regular audits and updates to Fullnodes and Validator Clients were also emphasized.

Forum Post: Becoming an Ethereum Node Operator Part 1: The Current Landscape of Liquid Staking Protocols

This post explores the complexities and entry barriers for potential node operators within Ethereum’s Liquid Staking Protocols (LSPs). @firstset discusses how solo staking represents a minor portion of the total Ethereum staked due to high capital and technical requirements. Instead, most staked ETH is managed by a few major entities, which poses a centralization risk counter to Ethereum’s decentralization goals. LSPs are responding by enabling more permissionless models for node operators to diversify control. The post provides a comprehensive comparison of leading LSPs, detailing their requirements, rewards, and operational costs, and concludes with an invitation to follow the second part of the series, which will evaluate the pros and cons of these protocols and offer strategies for small- and medium-scale node operators.

Forum Post: PERCH Proposal: Request for testing of Commit-Boost and the PBS Module

@DrewVanderWerff’s forum post outlines a proposal for the Commit-Boost and PBS Module, requesting testing from the Lido Validator Community. Commit-Boost has been in development and is scheduled for an audit by the end of October. The proposal seeks participation from at least 10 node operators with a total of 50,000 validators in Holesky for feedback and to ensure the software’s robustness. The testing focuses initially on the PBS module.