What Governance Model Is Required for a Liquid Staking Protocol Itself?
A robust, decentralized governance model is crucial for the LSD protocol itself to manage parameters like fees, reward distribution, and the addition/removal of node operators. Typically, this is achieved via a DAO structure where holders of the LSD protocol's native governance token vote on proposals.
This ensures the protocol remains credibly neutral and resistant to single-party control.
Glossar
Decentralized Governance Model
Mechanism ⎊ The Decentralized Governance Model operates through on-chain voting mechanisms, where token ownership grants proportional influence over proposals affecting the protocol's operation.
Governance Model
Framework ⎊ A governance model within cryptocurrency, options trading, and financial derivatives defines the rules and processes dictating decision-making and control over a protocol or system, influencing risk parameters and operational efficiency.
Liquid Staking
Stake ⎊ The core concept of liquid staking involves locking cryptocurrency assets, typically within a decentralized protocol, to participate in consensus mechanisms and earn rewards.
Liquid Staking Protocol
Yield ⎊ Liquid staking protocols represent an evolution in Proof-of-Stake consensus mechanisms, enabling cryptocurrency holders to earn staking rewards without directly operating validator nodes.