“This is the biggest change to how Lido Core staking works since Lido V2,” said Isidoros Passadis, head of staking at the Lido Labs Foundation. “The node operators that underwrite the majority of ETH staked through Lido are banding together with far fewer validators and, for the first time, they are backing that stake with their own capital, leaving the set of validators that underpin Lido Core much simpler and more secure.”
Ecosystem builders wondered whether enforcing capital requirements would drive away established node operators. Lido has confirmed that its existing 34 select operators are expected to move to CMv2, with none considering leaving due to the bond requirement.
“Rather than replacing the existing reputation-based model, bonds complement it with true economic accountability,” said Will Shannon, head of node operator mechanisms at the Lido Labs Foundation, in an interview with CoinDesk.
He also said the migration would use a separate consensus layer consolidation queue rather than Ethereum’s deposit and activation queue. Lido estimates that the transition will reduce annual staking rewards across the protocol by approximately 0.28%. Validators will continue to earn rewards until they exit, with missed rewards limited to the period before their balance reaches new validators.
