- Lido begins consolidating over 8 million ETH (worth ~$16 billion) onto Ethereum's post-Pectra validators, reducing validator count by nearly a third.
- Curated Module v2 introduces mandatory ETH bonds for node operators, replacing pure reputation with economic accountability.
- Community Staking Module v3 adds a new Identified DVT Cluster path with lower bonding and native reward-splitting.
- Migration will take months, with an estimated 738.5 ETH in missed rewards during the transition.
Lido, the leading liquid staking protocol, has kicked off its most significant upgrade since Lido V2. On Monday, the project rolled out Curated Module v2 (CMv2) and Community Staking Module v3 (CSMv3), while beginning to consolidate over 8 million ETH — worth roughly $16 billion — onto Ethereum’s larger, post-Pectra validators. This move marks a fundamental shift in how Lido Core operates, affecting the permissioned operator layer that has handled more than 90% of all staked ETH through the protocol since 2020.
The upgrade leverages Ethereum’s Pectra hard fork, activated in May 2025, which raised the maximum effective balance per validator from 32 ETH to 2,048 ETH through the new 0x02 credentials. Lido is migrating over 265,000 validators from the legacy 0x01 standard to the newer one, allowing a single validator to hold up to 2,048 ETH. This consolidation lifts the share of ETH secured by these larger “compounding” validators from about 32% to roughly 52%, while cutting Ethereum’s total validator count by close to a third and trimming attestation messages by an estimated 29% per epoch.
New Bond Requirements Replace Pure Trust
For the first time, Curated Module operators must post their own ETH as collateral. This bond can be seized to cover losses from slashing or operational failures, adding a layer of economic accountability on top of Lido’s existing reputation-based vetting. “Rather than replacing the existing reputation-based model, the bonds complement it with real economic accountability,” said Will Shannon, head of node operator mechanisms at Lido Labs Foundation, in an interview with CoinDesk. The bond requirement is smaller than in Lido’s permissionless modules because curated operators are still considered more trustworthy than open applicants.
Ecosystem builders had questioned whether enforcing capital bonds would drive away established node operators. Lido confirmed that all 34 of its existing curated operators are expected to transition to CMv2, with none planning to leave because of the bond requirement. “This is the biggest change to how Lido Core staking works since Lido V2,” said Isidoros Passadis, chief of staking at Lido Labs Foundation. “The node operators securing the majority of ETH staked via Lido are consolidating onto far fewer validators, and for the first time, they’re backing that stake with their own capital, leaving the validator set underpinning Lido Core much leaner and better secured.”
Community Staking Module v3 and Governance Updates
Alongside CMv2, Lido launched CSMv3, which introduces a new “Identified DVT Cluster” path with lower bonding requirements, native reward-splitting for operators, and faster governance for adjusting staking capacity limits. Following a DAO vote, 72 regular Simple DVT clusters have been wound down, with those operators routed toward CSM going forward. The governance update also removes unnecessary DAO votes for routine administrative tasks like changing an operator address, reducing bureaucracy.
The migration will 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 about 0.28%. Validators will continue earning rewards until they exit, with any missed rewards limited to the period before their balances reach the new validators. The migration is expected to take months because Ethereum limits how quickly validators can exit and be restaked. While offline, they stop earning rewards, which Lido estimates will cost about 738.5 ETH. The 117-day figure is the fastest Ethereum theoretically allows, while six months is the practical estimate.
It’s worth noting that Lido is undertaking this upgrade in a tighter market. Its revenue fell roughly 25% last year, and its share of all staked ETH slid from more than 28% in 2024 to just over 24% in December 2025. The consolidation and bond requirements aim to make Lido Core leaner and more secure, potentially restoring confidence and attracting more stakers despite the reduced rewards. With all 34 curated operators on board and a clear roadmap, Lido is betting that economic accountability will strengthen its position in the liquid staking landscape.