1. Background
Lido Finance has achieved immense success as the leading liquid staking protocol on Ethereum. This success is heavily integrated with the hard work of early core contributors, including @Izzy @dgusakov @vsh @KimonSh etc.
However, as the protocol matures and solidifies its position in the ecosystem, the current governance and operational structure must evolve. To mitigate long-term systemic risks, Lido needs to transition from an early-stage, core-team-driven model into a truly decentralized, community-led DAO.
2. Problem Statement
- Technological Inertia and Outdated Leadership Model:
The current leadership team was crucial during Lido’s zero-to-one phase in 2020–2022. However, the Ethereum staking ecosystem has drastically shifted towards Restaking, DVT (Distributed Validator Technology), and modular blockchain architectures. The incumbent team operates on an outdated, rigid governance mindset that focuses entirely on maintaining old infrastructure rather than driving innovation. This bureaucratic inertia has caused Lido to lag significantly behind. Next-generation, highly aggressive protocols and decentralized restaking networks—such as EigenLayer, Symbiotic, and Karak—are rapidly capturing market momentum, leaving Lido’s current technology stack looking obsolete and defensive. - Rapid Loss of Market Share and Competitive Edge:
Lido is actively losing its dominant position in the liquid staking market. From its historical peak of controlling over 32% of all staked Ethereum, Lido’s market share has systematically degraded, falling toward multi-year lows of 22-24%. Capital is systematically fleeing Lido in favor of more modern liquid staking token (LST) alternatives and yield-bearing restaking protocols. This decline is a direct result of leadership’s inability to deploy agile, high-yield solutions, allowing faster competitors to steadily erode Lido’s network effects and market relevance day by day. - Severe Misalignment with LDO Holders (The Value Accrual Crisis):
Lido generates millions of dollars in fee revenue, yet the economic architecture treats LDO purely as a “governance token” with zero financial utility. In the current DeFi landscape, holding a token without revenue-sharing, buybacks, or structural yield is economically unsustainable. LDO holders absorb the entire smart-contract and regulatory risk of the protocol, while the economic benefits are heavily diluted or retained within core operations. The current core contributors have consistently blocked or ignored proposals for a sustainable tokenomics revamp, effectively making LDO a decaying asset despite Lido’s massive market share. The priority must shift from expanding infrastructure for infrastructure’s sake to directly rewarding the capital providers and holders who secure the DAO. - Severe Voter Apathy and Delegate Oligarchy:
The current voting dynamics in Lido DAO are deeply flawed. Power is heavily concentrated in the hands of a few institutional delegates and whale wallets who control the vast majority of LDO voting power. This creates a delegate oligarchy where the wider community has effectively zero say in governance. Furthermore, voter participation among smaller holders is critically low because the current structure provides no incentives or reasons for them to engage, rendering the concept of a “decentralized” DAO meaningless. - Double Standards in Proposal Processing and Community Neglect:
There is a clear and unacceptable double standard in how the governance forum operates. When the core leadership team or affiliated insiders post a proposal, it receives immediate attention, rapid feedback, and is fast-tracked to a Snapshot vote within days. Conversely, when an ordinary community member or outside contributor submits a valid proposal or critique, it is routinely ignored, sidelined, or left without response for months. The current leadership acts strictly in its own self-interest, maintaining a closed ecosystem that actively discourages outside initiative and suppresses community-driven evolution
3. Proposal: Transition to an Open RFP Model and Independent Oversight
To address these critical flaws, reduce centralization, and realign the protocol’s focus toward LDO holders, propose a two-pillar restructuring plan:
- Implementation of an Open RFP (Request for Proposals) Model: Propose moving away from permanent, closed leadership roles for core development and operations. Instead, Lido DAO should launch an open, competitive bidding process (RFP) for the protocol’s primary technical and coordination roles. This will allow reputable, independent third-party Ethereum development teams, infrastructure providers, and research hubs to submit proposals to take over these responsibilities under transparent Key Performance Indicators (KPIs).
- Onboarding Independent Risk and Financial Firms for Tokenomics Reform: Propose onboarding external, specialized DeFi risk management and economic modeling organizations (such as Gauntlet, Block Analitica, or Nethermind). These independent entities should be officially tasked with auditing Lido’s current revenue streams and designing an urgent, sustainable tokenomics upgrade. This upgrade must prioritize direct value accrual for LDO holders (e.g., revenue sharing, buyback-and-make models, or governance-staking rewards) while strictly maintaining protocol security.
4. Next Steps & Community Feedback
We invite all community members, active delegates, and fellow LDO holders to voice their opinions on this restructuring framework. We also highly welcome comments and feedback from representatives of independent dev teams and risk firms regarding how they could assist Lido DAO in successfully managing this structural transition.
If this discussion reaches sufficient community alignment, we intend to move this proposal to a formal Snapshot vote to mandate a transition plan.