Highlights:
Lido gives stETH holders veto rights when governance changes threaten stakers.
Uniswap protocol fees shift part of trading revenue away from liquidity providers.
Compound showed how concentrated voting power can shape major treasury decisions.
Token holders and protocol users are not always the same people across decentralized finance governance systems. Governance tokens determine voting power, while users may supply liquidity, stake assets, borrow funds, or pay fees.
Research shows those groups can remain separate even when both depend on the same protocol. This separation matters when governance decisions change fees, upgrades, treasury spending, or capital protections.
A 2026 study of 48 major Ethereum DAOs found concentrated governance power across projects. It also found registration, staking, and delegation could strengthen that concentration. In Compound, earlier research found three voters could control most exercised voting power on average. Among 36 registration-based DAOs, fewer than half of eligible tokens registered in 32 cases.
Token Holders and Protocol Users Face Different Risks
LDO holders govern key Lido matters, while stETH holders allocate Ethereum capital within Lido’s staking system. Lido research described this arrangement as a principal-agent problem because the two groups can have different incentives. The protocol later introduced Dual Governance, giving stETH holders a way to challenge certain LDO decisions.
Governance delays begin when roughly 1% of Lido’s Ethereum TVL enters veto signaling. At about 10%, the system can trigger a rage quit process for dissatisfied stakers. That process can delay affected governance execution while participating users exit into ETH.
Uniswap shows the divide through protocol economics. UNI holders govern protocol fee parameters, while liquidity providers earn fees from trading activity. After UNIfication passed in December 2025, Uniswap began activating protocol fees across parts of the system.
Current documentation lists a 0.30% total fee for a Uniswap v2 trade. Liquidity providers receive 0.25%, while a 0.05% protocol fee goes to the protocol mechanism. A similar split applies to the documented 0.30% v3 tier. UNI holders do not receive those trading fees directly; the protocol’s governance and token economics determine how value generated by the system is handled, including the use of UNI burns under the relevant mechanism.
Compound and Optimism Test Different Governance Structures
Compound’s 2024 Golden Boys dispute showed how transferable voting power can influence treasury decisions. Proposal 289 sought 499,000 COMP, worth about $24 million at the time, for a yield-bearing product. The proposal passed with 682,191 votes against 633,636 despite objections from governance participants.
Security advisers also raised concerns about recently accumulated and delegated COMP supporting the proposal. Compound later reached a compromise, and the tokens were returned. The dispute centered on token governance and delegated voting power rather than a direct vote by protocol users.
Optimism tested another structure by dividing representation between its Token House and Citizens’ House. The Token House represented OP holders, while the Citizens’ House represented users, applications, and chains.
Citizens used a one-member-one-vote structure instead of token-weighted voting. Optimism paused the Citizens’ House indefinitely in June 2026, citing low participation and changing Superchain conditions.
Delegation Adds Another Layer to DAO Voting
A 2026 study found delegations often failed to match tokenholders’ expressed interests. The study also found ranking-based delegate interfaces tended to concentrate power among already prominent delegates. Another 2026 study linked ballot design with voting outcomes.
Author-favored choices received 58.8% more voting-power share than choices not selected by proposal authors. Approval-oriented choices had a 27.1% advantage, while first-listed choices had a 7.7% advantage. Researchers described those results as associations, not evidence of deliberate manipulation.
Across these cases, token holders and protocol users did not always occupy identical governance roles. Lido added challenge rights for stETH holders, while Uniswap changed fee distribution through governance. Compound demonstrated how delegated voting can shape contested treasury decisions, while Optimism paused its user-representation structure.
Taken together, these examples show that governance power and protocol participation can remain separate even within the same decentralized system. The practical question for DAO design is therefore not only who holds the governance token, but also whether the people using the protocol have meaningful mechanisms to influence decisions that affect them.
