Lido starts historic $16 billion migration to optimize Ethereum performance

“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.”

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.

“Rather than replacing the existing reputation-based model, the bonds complement it with real economic accountability,” Will Shannon, head of node operator mechanisms at Lido Labs Foundation, said in an interview with CoinDesk.

He also said 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.