Using the circular needle cast on 84(112) sts, place marker for beginning of round, and work stockinette st in the round.
After 5 rounds place 4 markers for the ear flaps: k7(11), place marker, k22(26) (right ear flap), place marker, k26(38), place marker, k22(26) (left ear flap), place marker, work to end.
Right ear flap: *knit to marker, slip marker, k13(15), turn work. Slip 1 purlwise with yarn in front, tighten the yarn in the back of the work so the loops of the slipped st from the previous row come over the needle = double stitch. P3, turn work, double stitch. Knit to next double stitch, knit the legs of the double stitch together as a single stitch, k1, turn work. Purl to next double stitch, purl the legs of the double stitch together as a single stitch, p1, turn work.
Keep working short rows, turning back after working 1 st after each double stitch. Work until the last double stitches are right next to the markers. Work the RS row to next double stitch, work the double stitch and slip marker.*
Left ear flap: Repeat *–*. Then work stockinette st to end of round.
On the next round work the legs of the double stitch together as a single stitch. Remove the ear flap markers but not the beginning of round marker. Work 8 rounds in stockinette st.
Begin the lace pattern on row 1 of the chart: work the 1 st at the right end, repeat the 14 st pattern 5(7) times, work the 13 sts at left. Work rows 2–22 of the chart.
Then work stockinette st in the round until the hat measures 9(12,5) cm from the front edge. On the next round place 4 markers for decreases: k10(14), place marker, *k21(28), place marker*, repeat *–* 3 times in total, work to end.
On the next round begin decreases: *knit to last 2 sts before marker, k2tog, slip marker, k1, skp*, repeat *–* 3 more times, work to end. 8 sts decreased, 76(104) sts on the needles. Repeat the decreases every other round 7(10) more times = 20(24) sts. Note: Switch to the double-pointed needles when needed.
Break the yarn and pull it through the sts. Weave in the ends.
Using the lining colour and the circular needle, pick up and knit 84(112) sts from the cast-on edge, place marker for beginning of round and work like the top of the hat. Work the lace section in stockinette st. Begin the decreases when the lining measures 8,5(12) cm from the front so the lining won’t be too long. Work the decreases as established.
Weave in all ends between the top and the lining. Fold the lining to the inside, then steam and shape the hat.
I-cord strings: Using the double-pointed needles and the top colour, pick up 4 sts from the bottom edge of the ear flap, at the edge of the top and the lining. K4, *do not turn work, slide the sts back to the right end of the needle. Hold yarn in back and k4.* Repeat *–* until the string measures approx. 25(30) cm. Break the yarn and pull it through the sts. Weave in the ends. Knit the other string in the same manner.
If you want, make a pompom approx. 5 cm in diameter using the lining colour.