Lido, the largest Ethereum staking protocol by total value locked, has launched Curated Module v2, a new version of its main staking module that for the first time requires professional node operators to back the stake they manage with their own capital, according to a blog post published Monday.
The release is Lido’s biggest protocol change since Lido V2 went live in May 2023. It begins the migration of more than 265,000 validators holding over 8 million staked ETH, worth roughly $16.5 billion, onto Ethereum’s high-balance validator design.
Validator consolidation and lower consensus load
Lido said the consolidation is expected to reduce Ethereum’s total validator count from about 880,000 to roughly 628,000, a drop of about one-third. It also expects attestation messages across the network to fall by around 29% per epoch, easing load on the consensus layer. All 34 node operators in the curated set are expected to make the move.
“This is the biggest change to how Lido Core staking works since Lido V2,” Isidoros Passadis, chief of staking at Lido Labs Foundation, said in the release. “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.”
According to CoinGecko, LDO traded at $0.38 at the time of writing, down 0.9% over the past 24 hours. The token hit an all-time low of $0.2374 on June 25. DefiLlama data showed the protocol with $18.8 billion in total value locked.
Bonds for professional operators
The Curated Module, the permissioned operator set at the core of Lido, secures around 90% of the staked ETH in Lido Core as of July 2026, according to the announcement. Since Lido launched in December 2020, those operators have mainly been held accountable through reputation and DAO-vetted onboarding. Contributors first proposed the CMv2 design on Lido’s governance forum in November 2025.
Under CMv2, each operator must post a bond denominated in ETH, stETH, or wstETH and held as stETH, with a single bond covering all of that operator’s validators.
Those bonds can be slashed under a new penalty framework to compensate stakers for validator slashing events, diverted execution layer rewards, or extended downtime. Penalties will be reported by a new Curated Module Committee and enforced through Easy Track motions that the DAO can veto.
The module also classifies operators into different categories, including public good operators building Ethereum clients and decentralization operators running nodes in underrepresented regions. Incentives are tied to those categories.
“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, told CoinDesk in an interview released alongside the announcement.
Only 0x02 withdrawal credential validators
CMv2 supports only validators with 0x02 withdrawal credentials, the high-balance validator type introduced in Ethereum’s Pectra upgrade in May 2025. That upgrade raised the maximum effective balance per validator from 32 ETH to 2,048 ETH.
Existing 32 ETH validators will be merged into larger ones through a consolidation pipeline that runs on a separate consensus layer queue, leaving Ethereum’s deposit and activation queue untouched. Lido estimates the migration will nearly double the share of ETH secured by compounding validators across the network, from 32.06% to 52.21%.
The stake migration is expected to begin shortly and take months. Lido cited an Ethereum activation queue of more than 40 days. The protocol estimates the transition will reduce annual staking rewards by about 0.28%, because validators give up some rewards during the window before their balances land on the new validators.
Under the Staking Router v3 rollout plan, the legacy module is set to stop receiving new stake in December 2026 and to be fully wound down around the first quarter of 2027.
Broader Lido Core release
CMv2 was shipped as part of a wider Lido Core release. The Community Staking Module, Lido’s permissionless arm, has moved to v3 and now includes an Identified DVT Clusters operator type. That allows independent stakers to run distributed validators through Obol or SSV with bonds as low as 0.5 ETH per key, along with native reward splitting.
According to the announcement, CSM secures more than 770,000 staked ETH across an estimated 335 active operators, equal to about 8.5% of Lido’s total value locked.
The Simple DVT Module is being wound down. Following a Snapshot vote, its 72 regular clusters have been closed, and operators were offered paths to continue through CSM. A dedicated permissionless module for 0x02 validators, called 0x02 CSM, is targeted for Q4 2026.
Governance approvals and next phase
LDO holders approved the upgrade in onchain vote #203, which ran from July 15 to July 18 and bundled LIP-33 with LIP-35. LIP-33 covers CMv2 and Community Staking Module v3, while LIP-35 is the Staking Router v3 upgrade that shifts Lido’s accounting from validator counts to actual balances.
The vote reached quorum and was enacted on July 20, starting execution through Lido’s dual governance process. Earlier, a Snapshot vote on LIP-35 passed in June with 57.4 million LDO in favor and 17 LDO against.
The contracts were deployed to mainnet on July 7 after audits by Certora, Statemind, MixBytes, and Composable Security.
A second CMv2 phase, outlined in the November 2025 proposal, is scheduled for Q4 2026. It is set to add custom fee curves, a strike system for underperforming operators, and a stake allocation mechanism Lido calls a validator marketplace, where deposits flow to operators based on fees, performance, and contribution to decentralization.
The release comes as Lido continues to expand beyond its core staking business, months after rolling out Lido V3 and its institutional stVaults.