Lido, a liquid staking protocol that allows users to earn staking rewards on Ethereum via the stETH token, has launched an update to its staking infrastructure aimed at improving validator performance and decentralization.
The update introduces the Curated Module v2, which adds support for 0x02 Ethereum withdrawal credentials. The change allows validators to augment their effective balance from 32 ETH to up to 2,048 ETH, According to for Lido update on Monday.
Lido said the migration could reduce the number of Ethereum validators from about 880,000 to about 628,000, a reduction of about a third. The migration has not started yet and data is based on Lido forecasts.
According to Lido, the change is expected to impact Ethereum’s consensus layer by reducing the number of validators and validator messages required to maintain the network. It is not intended to change the activities of the execution layer that determines transaction fees and gas costs.
The update also introduces modern liability rules for Lido node operators, including deposit and penalty mechanisms. Lido said future share distributions could place greater emphasis on factors such as operator performance, fees and contribution to the Ethereum ecosystem.
“Curated Module v2 is the next important step in this evolution,” Lido said, adding that the update introduces modern incentives for operators, bond-based security mechanisms and governance improvements. Lido said no action is required from stakers as the update will be done at the protocol level.
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