Lido V2 Upgrade: Staking Routers & Withdrawals to Enhance Decentralization

Last Updated: 8 January 2024

• The Lido V2 upgrade will focus on two major areas – staking routers and withdrawals.
• It will introduce a more diverse validator ecosystem, allowing users to develop on-ramps for new Node Operators like solo stakers, DAOs, DVT clusters, etc.
• The upgrade also features the withdrawal feature that allows users to unstake their stETH and withdraw ETH at a 1:1 ratio.

Introduction

The team behind the Lido Protocol has revealed the proposal for its largest upgrade to date – Lido V2. The protocol’s move toward complete decentralization will be further advanced with this update as it focuses on two major areas – staking routers and withdrawals.

Staking Router

Currently, the protocol uses a singular NodeOperatorsRegistry where a DAO selects node operators and incorporates them into a smart contract. However, with the V2 upgrade, a modular architectural design will be introduced which users can employ to develop on-ramps for new Node Operators such as solo stakers, DAOs, DVT clusters etc., leading to the creation of a more diverse validator ecosystem. According to Isidoros Passadis (the master validator and developer at Lido), “A variety of different types of validator pools could be more easily accessed by the Lido protocol” which would increase both total number of node operators who participate in the protocol and diversity of validator setups.

Withdrawal Feature

The second focus area is implementation of withdrawals which will allow users to unstake their stETH and withdraw ETH at a 1:1 ratio. As per Shanghai Upgrade on Ethereum network that enables token holders to withdraw their staked tokens for first time ever; Lido has designed withdrawals process in three separate steps – request fulfillment & claim. Also two modes have been prepared – turbo mode (default) where withdrawal requests are fulfilled quickly using all available ETH from user deposits & rewards; whereas bunker mode kicks in under catastrophic scenarios & slows down process so no one takes advantage of situation.

Rollout Roadmap

The team also revealed rough roadmap of V2 upgrade that started back in February 2021 with code freeze & security audits followed by testing & bug bounty programs in March 2021; finally launching mainnet version in April 2021 after code auditing & manual testing phase is completed successfully.

Conclusion

Overall this latest version of Lido Protocol promises enhanced security along with improved scalability when launched live on Mainnet Network as planned during April 2021 after successful completion of code audit & manual testing phase within timeline announced by team behind Lido Protocol Upgrade V- 2 .

Author
  • Florian Feidenfelder

    Florian Feidenfelder is a seasoned cryptocurrency trader and technical analyst with over 10 years of hands-on experience analyzing and investing in digital asset markets. After obtaining his bachelor's degree in Finance from the London School of Economics, he worked for major investment banks like JP Morgan, helping build trading systems and risk models for blockchain assets.

    Florian later founded Crypto Insights, a leading research firm providing actionable intelligence on crypto investments to hedge funds and family offices worldwide. He is the author of the bestseller "Mastering Bitcoin Trading" and has been featured in prominent publications like the Wall Street Journal, Bloomberg, and Barron's for his insights on blockchain technologies.

    With extensive knowledge spanning the early days of Bitcoin to today's explosive DeFi landscape, Florian lends his real-world expertise to guide both new entrants and seasoned professionals in capitalizing on the wealth-creating potential of crypto trading while effectively managing its inherent volatility risks.

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