LSD Governance

Overview

LSD is governed by its community through a stake-based governance system designed to balance decentralization, long-term alignment, and protocol safety.

Governance allows LSD token holders to propose and vote on key decisions, including protocol integrations, risk parameters, incentive programs, and future upgrades.

The system rewards long-term participation while protecting the protocol from short-term or malicious governance actions.

Governance Token

• Token: LSD

• Governance power is based on staked LSD, not liquid balance

• Longer staking duration increases voting power through a time-based multiplier

Voting Power

Voting power is calculated as:

Voting Power = Staked LSD × Time Multiplier

Time Multiplier

• Starts at 1.0×

• Gradually increases up to 2.0×

• Maximum multiplier is reached after 180 days of continuous staking

This mechanism:

• Rewards long-term commitment

• Reduces governance manipulation

• Encourages protocol-aligned decision making

Proposal Creation

To submit a governance proposal, a user must:

• Stake at least 10,000 LSD

• Maintain staking for a minimum of 7 days

• Submit a proposal within one of the supported categories

Proposal Categories

• Protocol Integration

• Parameter Changes (fees, limits, strategy constraints)

• Incentives (reward pools, emissions, campaigns)

• Emergency Actions

• General Proposals

Voting Process

• Voting period: 3 days

• Voting types:

  • For

  • Against

  • Abstain

Quorum & Approval

• Quorum: 10% of total staked LSD (snapshot-based)

• Approval threshold:

  • ≥50% of For votes

  • Abstain votes count toward quorum but not approval

Execution & Safeguards

• Governance decisions are executed on-chain where possible

• AI-based allocation systems must still respect:

  • Strategy limits (Safe / Balanced / Max Returns)

  • Risk constraints defined by governance

• Emergency proposals follow stricter validation rules

Governance cannot override core safety guarantees without explicit protocol upgrades.

Transparency

All governance activity is publicly visible, including:

• Proposal details

• Voting outcomes

• Snapshot data

• Execution status

This ensures accountability and trust across the ecosystem.

Design Principles

LSD governance is built on:

• Long-term alignment

• Risk-aware decision making

• Clear accountability

• On-chain transparency

Governance is a core part of how LSD evolves safely and sustainably.

Governance Examples

Below are examples of how LSD governance works in practice.

Example 1: New Protocol Integration

Proposal Type: Protocol Integration

Description:

Integrate Jito as an additional liquid staking protocol for LSD.

Details:

• Enable Jito as an allocation option for Balanced and Max Returns strategies

• Define maximum allocation caps per strategy

• Require AI risk and reward analysis before activation

Voting Outcome:

• If approved, Jito is added to the list of supported protocols

• AI begins evaluating Jito for future SOL allocations

• Allocation follows strategy-defined risk limits

---

Example 2: Adjust Strategy Risk Limits

Proposal Type: Parameter Change

Description:

Increase the maximum allocation for the Balanced Strategy from 30% to 35%.

Details:

• Applies only to the Balanced Strategy

• Safe Strategy remains unchanged

• AI allocation engine must respect the new limit

Voting Outcome:

• If approved, the new limit is enforced at the next epoch rebalance

• AI can allocate up to 35% to higher-yield protocols

Example 3: Launch an LSD Incentive Pool

Proposal Type: Incentives

Description:

Create a limited-time LSD incentive staking pool with higher rewards.

Details:

• Pool size cap: 500,000 LSD

• Duration: 30 days

• First-come-first-served

• Rewards distributed from protocol revenue

Voting Outcome:

• Pool is deployed on-chain

• Eligible users can stake LSD to earn enhanced rewards

• Pool automatically closes once caps or time limits are reached

Example 4: Emergency Risk Mitigation

Proposal Type: Emergency

Description:

Temporarily disable allocations to a protocol experiencing abnormal risk.

Details:

• Triggered by sudden TVL drop or exploit risk

• Immediately reduces exposure at next epoch

• Does not require protocol removal

Voting Outcome:

• AI allocation excludes the affected protocol

• Funds are reallocated to safer protocols

• Further actions may require a follow-up proposal

Example 5: Governance Parameter Update

Proposal Type: General

Description:

Change the minimum LSD required to submit a proposal.

Details:

• Increase proposal threshold from 10,000 LSD to 15,000 LSD

• Intended to reduce proposal spam

Voting Outcome:

• New threshold applies to all future proposals

• Existing proposals are unaffected