Lido is pushing forward with its largest protocol upgrade since V2 in 2023. The company disclosed that over 8 million staked ETH will be migrated to the new validator design following the Ethereum Pectra upgrade, a value of approximately $16.5 billion at current prices. This adjustment primarily affects the underlying staking structure and will not directly change gas fees or transaction speeds for ordinary users.
The migration will involve approximately 8 million ETH.
This migration covers most of the staked assets in the Lido Core system and marks the first major adjustment to the core node operation mechanism in the protocol in five years. Lido stated that after the migration, the number of validators across the Ethereum network is expected to decrease by about one-third, thereby alleviating the processing pressure on the consensus layer.
According to Lido, validator integration alone can reduce the number of attestation messages per epoch across the network by approximately 29%. These messages are used for synchronization and confirmation within the blockchain network, and a decrease in their quantity means a reduction in the burden of backend communication.
- Migrated asset size: Over 8 million ETH
- Corresponding value: approximately US$16.5 billion
- Expected decrease in attestation news: approximately 29%
34 node operators have switched to the new module.
This upgrade will migrate Lido's professional node operators to Curated Module v2. The announcement indicates that all 34 existing curated node operators will move to the new module, and no operators currently plan to leave due to the new requirements.
The most significant change in the new module is that node operators are now required to provide locked ETH as collateral. Previously, the Lido curated module primarily relied on operational records and reputation to constrain node performance; after the upgrade, a clear financial constraint will be added if operational performance fails to meet standards.
Lido states that this is not replacing the existing reputation mechanism with financial constraints, but rather adding economic responsibility to the existing framework. For the protocol, this means a more streamlined set of validators supporting Lido Core, and nodes will bear more direct capital costs for their actions.
The reward impact is approximately an annualized reduction of 0.28%.
Lido anticipates that this migration will proceed through a separate consensus layer consolidation queue, rather than consuming Ethereum's existing deposit and activation queues. This approach helps minimize disruption to other validators' entry into the process.
The protocol also anticipates that the migration will reduce the overall annual staking rewards by approximately 0.28%. However, validators will continue to receive rewards until the old validators officially leave; the potential reward loss will primarily occur during the transition period before the balance is transferred to the new validators.
In terms of impact, this upgrade leans more towards optimizing underlying efficiency. It won't directly result in lower transaction fees or immediately improve the user transaction experience, but it will help alleviate the long-term operational burden on the Ethereum consensus layer and make Lido's node operation constraints closer to capital-based management.
Additional information:This migration uses a separate consolidation queue, rather than the regular Ethereum deposit and activation queue, meaning the upgrade process will not directly crowd out other validators' regular entry channels.
