What is Lido DAO (LDO)?

TLDR
Lido DAO (LDO) is a decentralized governance system powering a leading liquid staking protocol, enabling users to stake Ethereum (ETH) while retaining liquidity.

1. Liquid staking: Users stake ETH to earn rewards and receive stETH tokens, which remain tradable.
2. Decentralized governance: LDO holders vote on protocol upgrades, node operators, and treasury management.
3. Dual Governance: stETH holders can veto proposals, balancing power between token holders and stakers.

Deep Dive

1. Purpose & Value Proposition

Lido solves the liquidity problem in proof-of-stake networks. Traditional staking locks assets, but Lido’s liquid staking lets users stake ETH and receive stETH tokens (CoinMarketCap). These tokens accrue staking rewards and can be used across DeFi (e.g., lending, trading), combining yield with flexibility. This mechanism supports Ethereum’s security while maximizing capital efficiency for users.

2. Governance & Tokenomics

The LDO token governs the protocol’s decentralized autonomous organization (DAO). Key responsibilities include:
- Setting fees and validator parameters.
- Managing a $1.35B treasury (36% of total LDO supply) for ecosystem growth.
- Approving upgrades like Dual Governance, which lets stETH holders delay or block harmful proposals by locking 1–10% of supply (Lido blog).

Token distribution is concentrated among early contributors (64% locked initially), but governance power is proportional to LDO holdings.

3. Key Differentiators

Lido pioneered liquid staking derivatives and remains the largest Ethereum staking provider. Its Dual Governance model (launched July 2025) is a DeFi first:
- Veto power: stETH holders trigger delays or exits if governance decisions threaten their interests.
- Rage Quit: If 10% of stETH opposes a proposal, governance halts until dissenters exit, making hostile takeovers impractical.

Conclusion

Lido DAO is a decentralized staking infrastructure that balances liquidity, governance, and Ethereum’s ethos. By aligning incentives between LDO holders and stakers, it aims to sustain Ethereum’s decentralization. How will evolving regulations and competitor innovations shape Lido’s dominance in liquid staking?