Lido, a liquid staking protocol that lets users earn Ethereum staking rewards through its stETH token, has launched an upgrade to its staking infrastructure that aims to improve validator efficiency and decentralization.
The upgrade introduces Curated Module v2, which adds support for Ethereum’s 0x02 withdrawal credentials. The change allows validators to increase their effective balance from 32 ETH to up to 2,048 ETH, according to a Lido update on Monday.
Lido said the migration could reduce Ethereum’s validator count from about 880,000 to roughly 628,000, a decrease of about one-third. The migration has not started yet, and the figures are based on Lido’s projections.
The change is expected to affect Ethereum’s consensus layer by reducing the number of validators and validator messages required to maintain the network, according to Lido. It is not designed to change execution-layer activity, which determines transaction fees and gas costs.
The update also introduces new accountability measures for Lido’s node operators, including bonding and penalty mechanisms. Lido said future stake distribution could place more weight on factors such as operator performance, fees and contributions to Ethereum’s ecosystem.
“Curated Module v2 is the next major step in that evolution,” Lido said, adding that the upgrade introduces new operator incentives, bond-based security mechanisms and governance improvements. Lido said no action is required from stakers because the upgrade will be handled at the protocol level.
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