Lido Upgrade Could Slash Ethereum Validator Count by One-Third

Lido, a liquid staking protocol that allows users to earn Ethereum staking rewards through its stETH token, has launched an upgrade aimed at improving validator efficiency and decentralization.

The upgrade introduces Curated Module v2, which adds support for Ethereum's 0x02 withdrawal credentials. This change allows validators to increase their effective balance from 32 ETH to up to 2,048 ETH.

Lido expects this migration to reduce the number of validators on the Ethereum network by one-third, from approximately 880,000 to around 628,000. The update also introduces new accountability measures for Lido's node operators, including bonding and penalty mechanisms.