Lido Plans to Migrate $16.5 Billion Staked ETH to New Validator Architecture, Validator Count Expected to Decrease by One-Third

Foresight News reports, according to CoinDesk, that the liquid staking protocol Lido has announced its largest upgrade since the deployment of V2 in 2023. The upgrade will consolidate over 8 million staked Ethereum (stETH, valued at approximately $16.5 billion) into the new validator architecture introduced after Ethereum's Pectra upgrade. This move is expected to reduce the total number of Ethereum validators by about one-third, significantly alleviating the burden on the consensus layer. Lido stated that the consolidation could reduce the number of validation messages per epoch across the network by approximately 29%. This upgrade will migrate Lido's professional node operators to the Curated Module v2 (CMv2), marking the first time in Lido's five-year history that curated module operators are required to provide locked ETH collateral as a guarantee for their performance. Previously, the system relied solely on reputation and track record. Isidoros Passadis, Head of Staking at the Lido Labs Foundation, described this as the most significant change to Lido Core's staking mechanism since Lido V2. Lido confirmed that all 34 existing operators plan to transition to CMv2, with no operators exiting due to the collateral requirement. The migration is expected to reduce the protocol's annualized staking yield by approximately 0.28%, and validators will continue to earn rewards until they exit.