Lido Upgrade Seeks to Cut Ethereum Validator Count by One-Third

Lido, a liquid staking protocol for Ethereum, has launched an upgrade that could reduce its validator count by one-third. The Curated Module v2 update introduces support for Ethereum's 0x02 withdrawal credentials and allows validators to increase their effective balance from 32 ETH to up to 2,048 ETH.

This change is expected to affect Ethereum's consensus layer by reducing the number of validators and validator messages required to maintain the network. The migration could reduce the current 880,000 validators to roughly 628,000, a decrease of about one-third.

The update also introduces new accountability measures for Lido's node operators, including bonding and penalty mechanisms. This is part of Lido's goal to improve validator efficiency and decentralization.