diff --git a/README.md b/README.md
index 3853047..5dfbfad 100644
--- a/README.md
+++ b/README.md
@@ -221,11 +221,10 @@ Remember that Blazar refreshes its internal state periodically. If you registere
 <details>
   <summary>Does Blazar work with chains with non-standard gov module (e.g., Neutron)?</summary>
 
-Yes, but with limitations. Neutron is a smart contract chain that implements its own governance (DAO DAO) via an on-chain contract. Blazar currently doesn't understand the custom smart contract logic, therefore the operator cannot use the `CHAIN` provider. However, upgrades can still be executed via:
-1. `NON_GOVERNANCE_COORDINATED` - a network operator registers the upgrade at a certain height.
-2. `upgrade-info.json` - the Neutron node will put the `upgrade-info.json` on disk prior to the upgrade. A network operator must register a docker version tag for the expected upgrade height.
+Yes, but you'll need to register manually a `GOVERNANCE` type upgrade in `LOCAL` or `DATABASE` provider.
 
-The downside of option 2 is the lack of pre-upgrade checks.
+Neutron is a smart contract chain that implements its own governance (DAO DAO) via an on-chain contract. Blazar currently doesn't understand the custom smart contract logic, therefore the operator cannot use the `CHAIN` provider.
+However, the Neutron governance is integrated with Cosmos SDK upgrades module and will output the `upgrade-info.json` at the upgrade height. Therefore from Blazar perspective, the `GOVERNANCE` type is valid, but the source provide must be different.
 </details>
 
 <details>
diff --git a/internal/pkg/daemon/daemon_test.go b/internal/pkg/daemon/daemon_test.go
index 040a1c6..fd34d0c 100644
--- a/internal/pkg/daemon/daemon_test.go
+++ b/internal/pkg/daemon/daemon_test.go
@@ -24,6 +24,7 @@ import (
 	"blazar/internal/pkg/log/logger"
 	"blazar/internal/pkg/log/notification"
 	"blazar/internal/pkg/metrics"
+	checksproto "blazar/internal/pkg/proto/daemon"
 	urproto "blazar/internal/pkg/proto/upgrades_registry"
 	vrproto "blazar/internal/pkg/proto/version_resolver"
 	"blazar/internal/pkg/provider"
@@ -253,6 +254,8 @@ func run(t *testing.T, metrics *metrics.Metrics, prvdr provider.UpgradeProvider,
 	// chain process must have logged upgrade height being hit
 	require.Contains(t, stdout.String(), "UPGRADE \"test1\" NEEDED at height: 10")
 
+	requirePreCheckStatus(t, sm, 10)
+
 	// perform the upgrade
 	err = daemon.performUpgrade(ctx, &cfg.Compose, cfg.ComposeService, height)
 	require.NoError(t, err)
@@ -272,6 +275,8 @@ func run(t *testing.T, metrics *metrics.Metrics, prvdr provider.UpgradeProvider,
 	err = daemon.postUpgradeChecks(ctx, sm, &cfg.Checks.PostUpgrade, height)
 	require.NoError(t, err)
 
+	requirePreCheckStatus(t, sm, 10)
+
 	outBuffer.Reset()
 
 	// ------ TEST NON_GOVERNANCE_UNCOORDINATED UPGRADE ------ //
@@ -291,6 +296,8 @@ func run(t *testing.T, metrics *metrics.Metrics, prvdr provider.UpgradeProvider,
 	require.Contains(t, outBuffer.String(), fmt.Sprintf("Monitoring %s for new upgrades", cfg.UpgradeInfoFilePath()))
 	require.Contains(t, outBuffer.String(), "Received upgrade height from the chain rpc")
 
+	requirePreCheckStatus(t, sm, 13)
+
 	err = daemon.performUpgrade(ctx, &cfg.Compose, cfg.ComposeService, height)
 	require.NoError(t, err)
 
@@ -301,6 +308,8 @@ func run(t *testing.T, metrics *metrics.Metrics, prvdr provider.UpgradeProvider,
 	err = daemon.postUpgradeChecks(ctx, sm, &cfg.Checks.PostUpgrade, height)
 	require.NoError(t, err)
 
+	requirePostCheckStatus(t, sm, 13)
+
 	outBuffer.Reset()
 
 	// ------ TEST NON_GOVERNANCE_COORDINATED UPGRADE (with HALT_HEIGHT) ------ //
@@ -334,6 +343,8 @@ func run(t *testing.T, metrics *metrics.Metrics, prvdr provider.UpgradeProvider,
 	// we want to be sure the pre-check worked
 	require.Contains(t, outBuffer.String(), "HALT_HEIGHT likely worked but didn't shut down the node")
 
+	requirePreCheckStatus(t, sm, 19)
+
 	err = daemon.performUpgrade(ctx, &cfg.Compose, cfg.ComposeService, height)
 	require.NoError(t, err)
 
@@ -341,11 +352,23 @@ func run(t *testing.T, metrics *metrics.Metrics, prvdr provider.UpgradeProvider,
 	err = daemon.postUpgradeChecks(ctx, sm, &cfg.Checks.PostUpgrade, height)
 	require.NoError(t, err)
 
+	requirePostCheckStatus(t, sm, 19)
+
 	// cleanup
 	err = dcc.Down(ctx, cfg.ComposeService, cfg.Compose.DownTimeout)
 	require.NoError(t, err)
 }
 
+func requirePreCheckStatus(t *testing.T, sm *state_machine.StateMachine, height int64) {
+	require.Equal(t, checksproto.CheckStatus_FINISHED, sm.GetPreCheckStatus(height, checksproto.PreCheck_PULL_DOCKER_IMAGE))
+	require.Equal(t, checksproto.CheckStatus_FINISHED, sm.GetPreCheckStatus(height, checksproto.PreCheck_SET_HALT_HEIGHT))
+}
+
+func requirePostCheckStatus(t *testing.T, sm *state_machine.StateMachine, height int64) {
+	require.Equal(t, checksproto.CheckStatus_FINISHED, sm.GetPostCheckStatus(height, checksproto.PostCheck_CHAIN_HEIGHT_INCREASED))
+	require.Equal(t, checksproto.CheckStatus_FINISHED, sm.GetPostCheckStatus(height, checksproto.PostCheck_GRPC_RESPONSIVE))
+}
+
 type threadSafeBuffer struct {
 	buf bytes.Buffer
 	mu  sync.Mutex
@@ -403,7 +426,7 @@ func generateConfig(t *testing.T, tempDir, serviceName string, grpcPort, cometbf
 		},
 		Checks: config.Checks{
 			PreUpgrade: config.PreUpgrade{
-				Enabled: []string{"SET_HALT_HEIGHT"},
+				Enabled: []string{"PULL_DOCKER_IMAGE", "SET_HALT_HEIGHT"},
 				// as soon as possible
 				Blocks: 100,
 				SetHaltHeight: &config.SetHaltHeight{
diff --git a/internal/pkg/state_machine/state_machine.go b/internal/pkg/state_machine/state_machine.go
index 006c23f..0c3bc53 100644
--- a/internal/pkg/state_machine/state_machine.go
+++ b/internal/pkg/state_machine/state_machine.go
@@ -120,7 +120,20 @@ func (sm *StateMachine) UpdateStatus(currentHeight int64, upgrades map[int64]*ur
 			// if the new status is coming from governance proposal then we update
 			// otherwise it must have been set by a blazar instance while processing upgrade
 			if !slices.Contains(statusManagedByStateMachine, sm.state.UpgradeStatus[upgrade.Height]) {
-				sm.state.UpgradeStatus[upgrade.Height] = upgrade.Status
+				// Some chains implement their own governance system that may be compatible with the cosmos sdk.
+				// Take "Neutron", it uses smart contract for governance and it is also compatible with the cosmos sdk, such that
+				// it produces the upgrade-info.json at the upgrade height.
+				//
+				// We want to handle the case where the GOVERNANCE upgrade is not coming from the chain itself but from anoter provider.
+				// In this case, we want to mark the upgrade as ACTIVE as there is no onchain component (blazar is aware of) that manages the upgrade status.
+				if upgrade.Source != urproto.ProviderType_CHAIN {
+					if upgrade.Height > currentHeight {
+						sm.state.UpgradeStatus[upgrade.Height] = urproto.UpgradeStatus_ACTIVE
+					}
+				} else {
+					// the onchain status is the source of truth
+					sm.state.UpgradeStatus[upgrade.Height] = upgrade.Status
+				}
 			}
 		case urproto.UpgradeType_NON_GOVERNANCE_COORDINATED, urproto.UpgradeType_NON_GOVERNANCE_UNCOORDINATED:
 			// mark the upgrade as 'ready for exection' (active)
diff --git a/internal/pkg/state_machine/state_machine_test.go b/internal/pkg/state_machine/state_machine_test.go
index 374a469..8139888 100644
--- a/internal/pkg/state_machine/state_machine_test.go
+++ b/internal/pkg/state_machine/state_machine_test.go
@@ -53,6 +53,35 @@ func TestStateMachineInitialUpgradeStates(t *testing.T) {
 	}
 }
 
+// Asserts that GOVERNANCE proposals from various chain sources are set to correct initial state
+func TestStateMachineInitialNonChainGov(t *testing.T) {
+	for provider, expectedStatus := range map[urproto.ProviderType]urproto.UpgradeStatus{
+		urproto.ProviderType_CHAIN:    urproto.UpgradeStatus_UNKNOWN,
+		urproto.ProviderType_LOCAL:    urproto.UpgradeStatus_ACTIVE,
+		urproto.ProviderType_DATABASE: urproto.UpgradeStatus_ACTIVE,
+	} {
+		upgrades := []*urproto.Upgrade{
+			{
+				Height: 200,
+				Tag:    "v1.0.0",
+				Name:   "test upgrade",
+				Type:   urproto.UpgradeType_GOVERNANCE,
+				Status: urproto.UpgradeStatus_UNKNOWN,
+				Source: provider,
+			},
+		}
+
+		upgradesMap := make(map[int64]*urproto.Upgrade)
+		for _, upgrade := range upgrades {
+			upgradesMap[upgrade.Height] = upgrade
+		}
+
+		stateMachine := NewStateMachine(nil)
+		stateMachine.UpdateStatus(100, upgradesMap)
+		assert.Equal(t, expectedStatus.String(), stateMachine.GetStatus(200).String())
+	}
+}
+
 // Asserts that the state machine panics when it receives an upgrade with an initial status that is not managed by the state machine
 func TestStateMachineUpgradesAreDeleted(t *testing.T) {
 	currentHeight := int64(100)