TLDR
The Ethereum staking industry has become increasingly competitive in the 4.5 years since the launch of Lido. Especially for large amounts of stake over long time periods, Node Operators are now able to offer staking, including (partial) insurance, with take rates as low as 1-3% in some cases. Given the increasingly competitive nature of the market, generally favorable market tailwinds for ETH, and the need for the Lido protocol to become both more robust and adaptive to market conditions, contributors working on Lido Core have put together thoughts on how Lido Core should evolve over the next year.
At the outset, it is suggested that the baseline rewards rate for most “Standard” Node Operators be decreased to 3.5% by Q1’26 while providing initial allowances for Client Teams and “Extra Effort” Node Operators. In parallel, a new module, which will be an updated version of the Curated Module (CMv2), is proposed to be deployed in late Q2’26, which, apart from enabling larger validators and consolidations, would set a ceiling for fee rates based on Node Operator type (e.g. 3.5% being the ceiling for Standard Curated Operators). This mechanism would allow Operators to modify their individual fee curves below this level in order to compete for stake, and the protocol to more naturally find market pricing. Through the Node Operator types mechanism, the allowances for Client Teams and these “Extra Effort” operators would become more formalized and robust.
This post details contributor perspectives on the future of Lido Core, exploring stake distribution, protocol reward share, and Node Operator participation in the short and longer term, and will address:
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Near term changes to the rewards structure of the Curated Module,
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Introducing NO-driven market dynamics by upgrading the Staking Router to v3, and
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The future version of the Curated Module (v2).
Lido’s Path to Decentralization via Modules
With the imminent introduction of stVaults and Lido V3, the traditional staking flow, where ETH deposited to Lido is allocated via modules connected to the Staking Router, is now known as Lido Core. Today, this includes the Curated Module (CM) with ~ 94.35% of stake, the Community Staking Module (CSM) with slightly over 2%, and the Simple DVT Module (SDVTM) with ~ 3.60% of stake.
Since the introduction of the Simple DVT and Community Staking Modules in 2024, the dynamics of the Lido Node Operator set have rapidly shifted. Through these modules, over 600 net-new Node Operators have begun to use the Lido protocol, accelerating the expansion of stake distribution over a wider set of Node Operators running more diversified infrastructure across the globe.
With the upcoming release of CSMv2, this dynamic will accelerate. CSMv2 sets the rails for a meaningful increase of stake operated by the Community Staking Module, from its current 3% share limit, to potentially 10% by early 2026. CSMv2 enfranchises home stakers while reducing the rewards rate for large Node Operators, and introduces features such as Node Operator Types and Extensions. Pending analysis of how this share increase impacts the distribution of stake for Node Operators across Lido Core, contributors believe the module also has the potential to increase its share limit even further over the medium-term.
The Simple DVT Module today is capped at a 4% share limit. Currently, there are no further plans to increase the share limit of the SDVTM, and the module is planned to be wound down by mid-2027, with potential opportunities for participating clusters to migrate to a new module, or by participating in the upcoming SSV-Lido Module.
All in, between the currently existing and planned modules, it is estimated that at least 20% of Lido Core could be operating via permissionless Node Operators by 2027, which would make this segment the 5th largest staking entity on Ethereum, and almost 3x the size of the current largest permissionless staking protocol. The addition of Lido V3’s stVaults will also present upside to this number for the protocol as a whole, given their permissionless nature.
Supporting the decentralization and development of the Ethereum ecosystem has and should continue to be among the top priorities of the Lido DAO. Apart from boasting the most decentralized validator set at scale, over the last two and a half years, over $10M in grants has been spent on initiatives related to furthering the decentralization of the Lido protocol, including the development and support of the Community Staking and Simple DVT Modules. Additionally, over 7,250 ETH-equivalent of staking rewards (nearly $27M) has been received by Client Teams (or their parent organizations) through their participation as Node Operators in Lido, and the Lido DAO is in the top 10 donors to the Ethereum Protocol Guild to-date.
The Changing Ethereum Staking Marketplace
Since the Beacon Chain’s launch in 2020, the ways in which Ethereum stakers have chosen to allocate stake have changed dramatically. At its onset, Beacon Chain staking predominantly comprised genesis and early home stakers, with the landscape evolving with wider adoption via CEXs, delegated professional Node Operator share gains, the growth of LSTs, the rise of Restaking, and more recently, the rebound of CEXs taking advantage of vertical integration to offer low-to-no cost staking.
Throughout this time, the competitive environment has also shifted significantly, with Node Operator staking reward fee compression evident across all subsectors of the industry, often driven by a desire to gain market share or as a loss-leader for more profitable products. Based on industry analysis, a range of 1%-7.5% covers the majority of staking service fees charged, with rates usually dropping significantly at higher levels of stake. Today, many professional organizations operate within the 1%–3% range, and in some cases, fees can be even lower. On top of this, many large Node Operators include insurance for stakers in their long-term agreements, while Curated Node Operators are not currently obligated to source cover or provide restitution for incidents (however, some do provide the latter).
While market share changes are not a new phenomenon, it is important to note that Lido’s market share has decreased from nearly 33% to 24% over the past two years.
Lido Core operates with a 10% fee on staking rewards, with different splits between DAO share and Node Operator share depending on the Module. For the Curated Set, this has traditionally been split evenly with 5% going to the DAO, and 5% to Node Operators based on the proportion of active validators they operate.
Increasingly for the Curated Module, this share split represents the higher end of fees charged by Node Operators for providing staking services in the open market (especially for this large level of stake). The amount of rewards a Node Operator receives is not directly affected by whether a Node Operator performs well, contributes to furthering the decentralization of the network’s staking layer, or whether a Node Operator is directly or indirectly offering competing services. In addition, while the split determines revenue distribution, it does not by itself encourage Node Operators to support protocol growth or engage in governance.
For the CSM, the design of CSMv2 is already forward looking – the rewards share for the DAO is larger for all participants after their first 16 active 32-ETH validators, while remaining the most competitive option on the market from a capital multiplier perspective.
The Simple DVT Module has the lowest reward share for the DAO, however from its inception has only been intended to be live for three years in order to initially onboard a large number of net-new Node Operators quickly while battle-testing mainnet DVT, which it has been tremendously successful in doing.
The breakdown of module reward splits as of CSMv2 (expected in October) is shown below:
| Module | Stakers Rewards (%) | Node Operator Rewards (%) | DAO Rewards (%) | Notes |
|---|---|---|---|---|
| Curated Module | 90% | 5% | 5% | Time to re-visit |
| Simple DVT | 90% | blended | blended | Scheduled to wind down ~2027 |
| Normal Clusters | 90% | 7% (split by NOs) | 2% | 1% DVT infra fee |
| Super Clusters | 90% | 5% (split by NOs) | 4% | 1% DVT infra fee |
| Community Staking Module | 90% | blended | blended | NO Rewards likely converge towards 3.5% as module grows |
| Permissionless | 90% | 3.5% | 6.5% | |
| ICS | 90% | 6% | 4% | First 16 validators, 3.5% NO share thereafter |
The Future of Lido Core
For the Lido DAO to continue its investments in making staking simple, secure, and decentralized, now with the foundation laid as the most decentralized staking solution at scale, it is important to shift focus to increasing competitiveness and adaptability alongside decentralization.
Looking forward, the priority is to:
- Stay competitive in a rapidly evolving staking marketplace where fees, performance, and user expectations are shifting.
- Enable adaptability so the protocol can respond quickly to market changes, technological shifts, and validator dynamics.
- Deepen decentralization by ensuring that more stake flows through permissionless operators, community-driven modules, and mechanisms that reward diversity of clients (and their development), geographies, and infrastructure.
The vision is a Lido Core that not only continues to deliver simple, secure staking at scale, but also evolves into a system that can reallocate stake dynamically, optimizing across performance, decentralization contribution, and fees. The future of Lido Core should be leaner and more precise in how it directs stake, and while retaining its strong alignment with Ethereum’s long-term health and the DAO’s decentralization mandate.
As such, the remainder of the post will cover three topics for consideration and community discussion over the coming few months:.
- Proposed changes to the fee structure for the Curated Module in the near-term
- An upgrade of the Staking Router to v3 (SRv3)
- The introduction of an upgraded version of the Curated Module (CMv2) in 2026
Should there be broad community agreement, follow up Snapshot votes for signalling approval of the direction by tokenholders would take place.
Curated Module Fee Changes
To set the stage for the future of Lido Core via SRv3 and CMv2, it is suggested that the fee structure for the Curated Module be adjusted to remain competitive with the broader staking ecosystem, while also supporting long-term decentralization goals.
In order to sustainably maintain funding efforts for ground-breaking mechanisms such Dual Governance, continue to promote decentralization via initiatives like CSMv2, as well as ongoing ad-hoc contributions, the protocol should employ mechanisms that seek baseline fees for Node Operators more in line with industry standards.
With historical considerations from the DAO regarding supporting client teams and geographic decentralization, this rewards structure should have a degree of differentiation based on Node Operator characteristics, in line with the work on the development of the idea of Node Operator types for CSMv2. To start in the near-term, it is suggested that three basic characteristics of Node Operators are considered: Standard Tier Operators, Client Team Tier Operators, and Extra Effort Tier Operators.
The changes outlined in this section would be proposed for implementation in December 2025, and remain in effect until the adoption of CMv2 if implemented by the DAO in 2026, after which similar aggregate (or lower, due to the competitive mechanism) fee rates are expected to be seen.
It is suggested that the baseline fee for most Node Operators, or “Standard Tier Operators”, be decreased to 3.50%. If considered in terms of a fee curve, where Node Operators could set a different fee based on ranges of active 32-ETH validators (which is expected to be the case in CMv2), this would roughly resemble of a blended fee rate of 5% for the first 1000 32-ETH validators (32,000 ETH), 3.75% for the second 2000 (64,000 ETH), and 3% for stake thereafter based on the current number of active 32-ETH validators run by Curated Node Operators (~ 7,000 or 224,000 ETH). For any amount of stake over the soft-cap of 1% of total Ethereum staked via Lido (~ 361,000 ETH), the suggested ceiling on Node Operator fee would be 1%.
It is suggested that the “Client Team Tier Operators” that are part of the Lido Node Operator set receive a higher fee of 4.50%. This would roughly resemble a blended fee rate of 5% for the first 3000 32-ETH validators (96,000 ETH) and 4.15% for stake thereafter based on the current number of active 32-ETH validators run by Curated Node Operators (~ 7,000 or 224,000 ETH). For any amount of stake over the soft-cap of 1% of total Ethereum staked via Lido (~ 361,000 ETH), the Node Operator fee would be 1%
In addition, another Type is proposed to be added to continue incentivizing Node Operators to operate infrastructure in ways that substantially improve the decentralization of the network, such as running stake in under-penetrated regions (e.g. LatAm, Africa, portions of Asia-Oceania), operating extremely diverse validator setups from a client or infrastructure perspective, as well as for Node Operators that contribute to the Lido ecosystem via e.g. synergistic products or utilizing stVaults in a significant manner.
These Node Operators, considered “Extra Effort Tier Operators” would receive a reward share of 4.00%, roughly resembling a blended fee rate of 5% for the first 1000 32-ETH validators (32,000 ETH), 4% for the second 2000 (64,000 ETH), and 3.75% for stake thereafter based on the current number of active 32-ETH validators run by Curated Node Operators (~ 7,000 or 224,000 ETH). For any amount of stake over the soft-cap of 1% of total Ethereum staked via Lido (~ 361,000 ETH), the Node Operator fee would be 1%
The Node Operators that would be proposed for inclusion in the subsets of Client Team or Extra Effort Node Operators would be communicated in the official proposal in the coming weeks following community discussions.
The proposed changes reflect the higher expectations of Node Operators participating in the Curated Module, while bringing fee rates more in-line with Node Operators fees in CSMv2. Node Operators in the Curated Module have higher up-front costs given the need to support significant amounts of stake with robust failover setups, to support distributed infrastructure, run SRE on-call schedules, undergo extensive due-diligence, quarterly reporting expectation via VaNOM, often opt-in to providing restitution for incidents, and also cover costs that are sometimes not immediately transparent (e.g. the DVT provider fees for 1000 intra-operator DVT keys).
These changes would increase the DAO’s portion of staking rewards in the Curated Module, while continuing to support the efforts of Client Teams and Node Operators prioritizing infrastructure decentralization. As has historically been the case, other grants to support ecosystem efforts will continue to be considered on an ad-hoc basis via LEGO, which supports initiatives around privacy, security (such as the Fusaka security competition), DeFi, and staking in general.
While these changes are substantial, they would not be expected to impact the business continuity of Node Operators participating in the Curated Set. These Node Operators today run over 7,000 32-ETH validators (224k ETH) using the Lido protocol (and many participate in the Simple DVT and CSM modules), and generally have strong businesses outside of the protocol.
Given the recent improvement in ETH–fiat exchange rates, Node Operators receiving a 3.5% rewards share would be on track to earn a comparable amount in dollar terms to prior periods - currently about $941k at a $4,000/ETH price, versus approximately $1.02M at 2024 average prices and $910k at 2025 YTD prices (assuming a 5% fee). Should ETH experience a sustained decline below ~$2,000, the DAO should consider revisiting these rates as part of the proposal, particularly if concerns are raised regarding Node Operator business continuity.
Importantly, the changes to move towards this vision should not be viewed in isolation. The near-term proposed adjustments to the Curated Module would be the first steps along a broader evolution of Lido Core. Rather than jumping straight into complex, multi-factor designs of a protocol wide Staking Marketplace, the progression should be more gradual: introducing simpler interim distinctions (such as “Standard Tier” vs. “Client Team Operator”) while laying the groundwork for richer characteristics and mechanisms in SRv3 and CMv2 that are discussed in the following sections. By framing the path this way, the community can evaluate the near-term proposed changes as part of a coherent long-term direction, rather than piecemeal updates.
Staking Router v3
In 2026, an updated version of the Staking Router is expected to be implemented, introducing several foundational upgrades to Lido Core. The leader among these is the adoption of a balance-based accounting system (which governs the accounting, deposit and withdrawal operations for the protocol), enabling modules to support either 0x01 or 0x02 validator types, a critical step in accommodating larger validators and facilitating validator consolidations.
Another key innovation is in the introduction of competitive dynamics for Node Operators through the Validator marketplace or ValMart. Valmart will be a framework for distributing and reallocating stake across (and within) modules in a more dynamic and competitive way within the confines of their share limits. ValMart is envisioned to factor in parameters such as Node Operator type, fees, performance, and contributions to infrastructure decentralization and resilience. This approach aims to reward quality, diversification, and active participation, while allowing the protocol to more flexibly direct stake, and the DAO to fine-tune parameters and weights if deemed necessary.
SRv3 marks a broader architectural shift. By enabling more granular control over fees and stake allocation, reallocation and rebalancing, the protocol will be able to deliver several important new features, such as to:
- Reallocate stake between operators and modules,
- Support new deposits into large validators, streamlining both capital flow and network footprint,
- Allow for partial withdrawals or deposits, potentially improving unstaking times and reducing dilutive effects due to stake churn,
- Lay the groundwork for more efficient validator management.
Future features may also include allowlisted direct deposits to specific modules or Node Operators. In concrete, these direct deposits would enable allowlisted stakers to specify exactly which module or NO they want their stake allocated to.
Taken together, these capabilities position the Lido protocol to be leaner and allocate stake at scale with greater precision, ensuring the protocol remains competitive, resilient, and aligned with the Ethereum network’s long-term direction.
Curated Module v2
Later in 2026, the updated version of the Curated Module (CMv2) aims to refine the protocol’s performance, risk coverage, and ecosystem participation while preserving decentralization and competitiveness within the broader Ethereum landscape. CMv2 will be built on the proven CSM codebase, which has already demonstrated effectiveness and scalability.
Currently under design, CMv2 is expected to introduce several key features, which will be adapted as needed to meet the requirements of Lido Curated Node Operators:
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Bonding: Node Operators will be able to provide bonds that serve dual purposes: they will be a prerequisite for uploading keys and can also influence stake allocation. As the Curated module is a permissioned module, bonds are expected to be meaningfully smaller than in permissionless modules. This mechanism will contribute to both coverage and reducing the protocol’s overall risk profile.
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Performance-based parameters: The integration of a performance oracle can allow the protocol to consider actual validator performance when allocating stake and determining priority for validator exits or withdrawals. This allows overall rewards for a Node Operator to be more closely related to performance, improving efficiency and maintaining competitiveness in the broader market.
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Node Operator Types: CMv2 would introduce differentiated Node Operator types, enabling distinct incentive mechanisms based on operator characteristics. These parameters, such as required bond amounts, performance thresholds, and penalties, allow for tailored rewards distribution. Public-good Node Operators, for example, could receive higher rewards (as described in the section above), and a portion of staking rewards could be allocated to support public goods, furthering Lido’s role in strengthening the Ethereum ecosystem.
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Customizable Rewards Share Curves for Node Operators: This feature would allow Node Operators to set their own rewards share curve up to a predefined (DAO-set) upper limit. It incentivizes participation, aligns interests, and supports the broader goal of optimizing rewards distribution across a decentralized network.
By combining these features, CMv2 aims to enhance the performance, sustainability, and fairness of Lido Core, ensuring the protocol continues to attract and reward high-quality Node Operators while advancing Ethereum’s decentralization.
Research is also underway regarding potential mechanisms that would incentivize Node Operators to more actively engage in DAO governance via LDO, by combining functionality unlocked via SRv3 and CMv2.
More information regarding the proposed design of CMv2 is expected to be published in the coming months.
Closing Thoughts
Given the changing Staking Marketplace and the evolution of the protocol over the last years, Lido Core should adapt to facilitate a staking protocol that offers more competitiveness, adaptability, and deeper decentralization. The protocol has already demonstrated that decentralized staking can operate at scale, the next step is ensuring it remains resilient and attractive in an increasingly competitive environment.
This post is now open for community discussion here on the forum and will be presented via venues such as the Lido Community Call. In the coming months, a Snapshot vote will be proposed for the adjustments to the Curated Module, and more detailed information regarding SRv3 and CMv2 are expected to follow this fall.