Lido governance process
This page explores how the decisions in Lido governance process are made.
Nearly all or most of the decision made by the Lido DAO have on-chain results: either immediate transactions or transactions to be made in the future. To make sure that those decisions are well-informed, as well as properly communicated with the wider community, the governance process in Lido consists of multiple steps.
Lido Governance process
Regular process
Regular process consists of several stages:
Discussion
The first step for any idea, proposal, or grant request is publishing on the Research forum and gathering community feedback.
The usual timeframe between the initial post & the next steps is at least 7 days. Once the proposal is welcomed & feedback is incorporated, it could move on to the next step.
Snapshot
The next step is Snapshot voting. To create a Proposal on the Lido DAO Snapshot the user needs at least 1k LDO. This minimum threshold deters spam and lowers malicious proposals. If you don't have enough LDO tokens you could ask DAO Operations Workstream to create a Proposal (click here to send a request).
Lido DAO voting power is linearly proportional to the token balance of the voter on a specified block (”snapshot”). The more LDO there is on a user’s balance, the greater voting power the voter gets.
For the decision being made on Snapshot, the proposal needs to reach a minimum quorum: more than 5% of the total token supply must vote for one of the options. The option that gets the simple majority wins.
In case the decisions made by the DAO do not require any on-chain actions a successful Snapshot is the final step. Others move to the next step of on-chain voting.
Snapshot voting cadence:
Snapshot voting occurs once a month. All new proposals are collected and go live, usually on Thursday. The voting duration is 7 days. You can find the closest voting slot on the calendar.
On-chain
When a Snapshot passes the next step is an on-chain vote.
The Lido DAO utilizes the Aragon framework for on-chain governance. Aragon is able to fulfill different operations like updating smart-contracts, fund transfers and more. One can use snippets from this repo.
To reach a quorum an on-chain vote needs to have more than 5% of the total token supply vote for one of the variants. If a quorum hasn't been reached the proposal will be rejected.
If a quorum is reached, the outcome of a vote is determined by the percentage of tokens used to vote "Yes". The support threshold is 50%. This means if more than 50% of the tokens used to vote were for the "Yes" option, the decision can be enacted. Otherwise, it is rejected.
On-chain voting lasts 72 hours and has 2 phases:
- The main phase, lasting 48h, is conventional voting, where one can vote both for and against.
- The objection phase, lasting 24h, when one can vote against or change their vote from for to against.
In order to reduce operational burden and voter fatigue, if there are several passed Snapshot proposals that need an on-chain execution they are usually combined into a package – an “Omnibus” vote.
On-chain voting cadence:
“Omnibus” on-chain vote starts in line with the Snapshot voting slot, on Tuesday at 14:00 UTC. You can find the closest voting slot on the calendar.
Proposals addressing existential threats to the protocol or the DAO are considered urgent. Vote on urgent proposals may be started outside of the regular timetable.
Emergency track
In emergency cases, votes can start without going through all the steps. The vote can be immediately created on-chain, bypassing Snapshot voting and the Research forum discussion. Although vote initiation is permissionless, there is an expectation to present a forum proposal framing and explaining it either before the start or immediately after the motion begins, especially in the case of urgent motions.
Easy Track
The Easy Track application has been developed as an efficient mechanism to assist with routine and uncontentious governance proposals for the Lido DAO. An Easy Track motion is considered to have passed if the minimum objections threshold (0.5% of the total token supply) hasn't been exceeded. As opposed to on-chain voting, Easy Track motions are cheaper and easier to manage.
Most Easy Tracks are set up to optimize Committee operations. Only authorized addresses can start the Easy Track motion and usually, this role is granted to the committee multisig. An Easy Track motion lasts 72 hours, and the objections threshold is 0.5% of the total token supply.
Some examples of an Easy Track motion are Node Operators increasing staking limits, Funds being allocated to the LEGO program, and Funds being allocated to reward programs.
Lido on L2
Lido employs token and bridging contracts on Arbitrum, Optimism, Base, ZkSync Era, Mantle and Linea utilizing upgradable contract structures. These are overseen by Lido DAO, with mainnet voting facilitated through the Governance Bridge Executor contracts. Additional information is available in the launch forum post.
Committees
In addition to all this, to streamline routine governance operations, some of the activities of the DAO are governed by committees.
The creation of committees occurs through a post on the Research forum and then through a Snapshot vote. Transactions from committees usually go through Easy Track.
Committees are required to provide public updates on their activities through the Research forum.
LNOSG (Lido Node Operator Subgovernance Group)
LNOSG evolves the node operator registry so that it is as decentralized, permissionless, and secure as possible.
It creates mechanisms that reward effective node operators and ensures that ineffective or malicious node operators are minimized.
LEGO (Lido Ecosystem Grants Organisation)
The mission of LEGO is to grow the greater liquid staking ecosystem through fast and unimpeded grants to individuals, projects, and initiatives. We strive to fund individuals, projects, and initiatives that benefit Lido and the surrounding space while maintaining efficiency and accountability for significant developments. Read more on the Research forum.
Liquidity Observation Lab (LOL)
The Liquidity Observation Lab is a community-driven initiative designed to:
- Strategically boost liquidity in crucial stETH applications.
- Identify and aid potential applications that can enrich the stETH ecosystem.
- Promote temporary liquidity measures, targeting specific applications with defined outcomes.
More info on the Research forum.
Rewards Share Committee
The committee aims to grow stETH by working long-term with other protocols and providers. The Committee is charged with vetting and filtering participants, abuse analysis and disqualification, reward calculation, and distribution of rewards.More info on the Research forum.
Treasury Management Committee
The committee is responsible for maintaining and executing policies related to treasury management. The committee proposes and enacts strategies and actions, communicates transparently with the community, and may propose modifications or changes to authorized strategies—more info on the Research forum.