Lido Launches Largest Ever Upgrade: to Onboard Over 8 Million ETH Staked, Validator Count Expected to Drop by One-Third

July 27th, Ethereum's largest staking liquidity protocol Lido announced the launch of its largest protocol upgrade since the V2 upgrade in 2023, integrating over 8 million staked ETH (approximately $16.5 billion) and migrating to Ethereum's post-Pectra upgrade new validator architecture.

This migration is expected to reduce the number of Ethereum network validators by approximately one-third, lowering the consensus layer load. Lido stated that after the upgrade, the number of validation attestations per epoch for the entire Ethereum network is expected to decrease by about 29%, thereby improving network efficiency.

This upgrade will migrate professional node operators to the Curated Module v2 (CMv2) architecture. Unlike previous reliance on operator reputation and historical performance, CMv2 requires Lido-selected node operators to lock ETH as a security deposit for the first time, providing economic guarantees for node operation performance.

Lido stated that all 34 selected node operators are expected to complete the migration, with no operators exiting due to the new deposit requirement. Lido's Staking Lead, Isidoros Passadis, said that this upgrade will streamline the validator set supporting Lido's core staking operations and enhance security through capital constraints.

Lido expects that this migration will reduce the protocol's annual staking yield by approximately 0.28%. Validators will continue to receive rewards before exiting the migration, and any loss in earnings may only occur during the brief period before the balance is transferred to the new validators.