Community Staking Module

Proposals
201

CSM’s share of Lido TVL has been steadily increasing since the last change of the stakeShareLimit. Currently sitting at 6.9%, CSM is approaching the limit of 7.5%. Hence, the question pops up: “Should the CSM stake share limit be raised again?”

To answer this question, I suggest considering the following facts:

  • CSM is the most decentralized staking module in Lido. Both by the total number of node operators and the maximum stake controlled by the largest operators.
  • CSM offers an unpresident protection for stETH holders via its bonding system and automated penalties.
  • Despite having slightly lower DAO fee compared to the curated module (~6.09% for CSM as of last CSM Oracle report vs ~6.23% for curated), CSM is expected to see DAO fee increase as more default-type operators get their keys deposited and activated. If we assume all keys from the current CSM queue are active, we can get smth like 6.18-6.2% (see https://dune.com/dgusakov/lido-csm).

Given all that, I believe that raising CSM’s stakeShareLimit from the current 7.5% to 8.5% makes total sense and should allow for the future growth of the permissionless part of the Lido protocol.

Since stakeShareLimit is always changed together with priorityExitShareThreshold, the final set of proposed parameters is:

  • stakeShareLimit = 850 BPS (8.5%)
  • priorityExitShareThreshold = 1020 BPS (stakeShareLimit * 1.2 or 10.2%)

Note: Lido DAO has already approved potential raise of CSM’s stakeShareLimit up to 10% here.

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