Lido begins consolidating $16 billion in staked ETH with Curated Module v2

Lido, Ethereum's largest staking protocol, has begun its largest upgrade since 2023, consolidating over $16 billion in staked ETH onto a new architecture. The move to its Curated Module v2 is expected to cut Ethereum's total validator count by a third, easing network load. For the first time, Lido's 34 node operators must post ETH bonds, adding economic accountability to the system.

Lido Curated Module v2 upgrade

• ▪Lido, the largest staking pool on Ethereum, has begun its largest upgrade since 2023, transitioning node operators to its Curated Module v2 (CMv2)
• ▪The upgrade involves consolidating over 8 million staked ether (stETH), valued at $16-$16.5 billion, onto a new backend architecture
• ▪The staked ETH is being moved onto Ethereum’s larger post-Pectra 0x02 validators

Ethereum validator consolidation

• ▪The consolidation is expected to reduce Ethereum's total validator count by approximately one-third
• ▪The migration will use a separate consensus-layer consolidation queue rather than Ethereum’s standard deposit and activation queue

Node operator bond requirements

• ▪All 34 of Lido's existing curated node operators are expected to transition to the new system despite the bond requirement
• ▪For the first time in Lido's history, operators in the curated module must back their performance with locked ETH bonds
• ▪The new bond requirement adds financial penalties and economic accountability to a system that previously relied on reputation

Network performance impact

• ▪Lido expects the consolidation to cut attestation messages across the Ethereum network by roughly 29% per epoch
• ▪The upgrade aims to ease the load on Ethereum's consensus layer and improve background network performance, but will not directly reduce gas fees or speed up user transactions
• ▪Lido estimates the transition will reduce annual staking rewards across the protocol by about 0.28%