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How Does a Liquid Staking Derivative Impact PoS Governance?

LSDs can centralize voting power with providers, separating the staker's liquidity from direct governance participation.
Greeks.Live30.10.25

How Does a Liquid Staking Derivative Impact PoS Governance?

Liquid staking derivatives (LSDs) allow users to maintain liquidity while their underlying assets are staked. By holding the LSD, users may gain voting rights, or these rights may be centralized with the LSD provider.

This introduces a potential centralization risk where a few large LSD protocols could gain outsized influence over governance decisions. It separates the economic interest from direct participation.

What Is “Liquid Staking” and How Does It Differ from Solo Staking?
How Do Derivative Protocols Handle the Underlying Asset’s Governance Rights?
How Is the “Yield” on an LSD Similar to a Dividend Yield on a Stock Derivative?
What Is the Risk of Voting Power Centralization If Large Holders Acquire a Majority of Governance Tokens?

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