Lido's Core Upgrade Reduces Ethereum Validators by Nearly 30% with New Validator Architecture

Lido Crypto's Core 2026 protocol upgrade has brought significant changes to its staking module, including native support for 0x02 withdrawal credentials and a restructuring of node operator economics.

The upgrade, which is expected to reduce the total number of Ethereum validators by about 29%, is designed to improve the efficiency and sustainability of the Ethereum network. The new Curated Module v2 (CMv2) has already been rolled out in two phases, with phase one introducing 0x02 validator support and operator classification.

The CMv2 also introduces a formal penalty framework, where node operators are required to have financial skin-in-the-game, covering underperformance, downtime, slashing events, and execution-layer rewards violations. This change is expected to increase the share of ETH secured by compounding validators from 32.06% to 52.21%, and reduce the Ethereum validator set from approximately 880,000 to an estimated 628,000.