Lido Upgrade Aims to Slash Ethereum Validator Count
Lido, a liquid staking protocol for Ethereum's stETH token, has launched an upgrade to its staking infrastructure. The Curated Module v2 update adds support for Ethereum's 0x02 withdrawal credentials, allowing validators to increase their effective balance from 32 ETH to up to 2,048 ETH.
This upgrade aims to improve validator efficiency and decentralization by reducing Ethereum's validator count. Lido projects a decrease of about one-third, from approximately 880,000 to roughly 628,000 validators.
The migration is expected to reduce the number of validators and validator messages required to maintain the network, affecting Ethereum's consensus layer but not its execution-layer activity.
Lido has also introduced new accountability measures for node operators, including bonding and penalty mechanisms. Future stake distribution may place more weight on factors like operator performance, fees, and contributions to Ethereum's ecosystem.