A41 is currently running validator nodes on multiple networks including testnet nodes on Lido-Obol and Lido-SSV. And, it has been actively looking for opportunities to onboard Lido DAO in multiple ways.
A41 is interested in applying for the next Lido ETH onboarding round and wanted to make an inquiry to the DAO when the next onboarding applications will open. Also, if possible to answer, what will be the main criteria for assessment(with Shapella upgrade are there additional criteria that LNOSG wants to assess further?) and how many will be selected for the next wave?
Against the backdrop of withdrawal being enabled with Lido v2, any tentative outlines on when the next onboarding phase will be and what (additional) categories will be evaluated could help new node operators to prepare joining Lido DAO as operators.
Technically the DAO can decide to add or remove operators whenever it wants to. Historically, new operators have been added a few times per year so that new independent NOs are added to the set, and to better distribute stake amongst them . There is also a soft target that no NO should have more than 1% of total ETH staked allocated to them via Lido, as explained in the Operator Set Strategy (this is not a ratified policy at the moment, but I think it would be opportune to do so once V2 is out and some considerations around V2 modules are added).
As at end of Q1/23, the majority of operators are above this soft 1% target
(which is logical given that Lido had ~32% stake share and 29 operators at the time). In my opinion, this indicates that a new onboarding round would be highly desirable. NOTE: this graph will be included in VaNOM metrics as of Q1, hopefully to be published within the week.
As you pointed out, the protocol is currently undergoing the V2 update with which native withdrawals will be enabled to allow users to unstake directly via the Lido contracts. In terms of timing, I think it makes sense to wait to see what effect the unlocking of withdrawals has on total ETH staked via Lido. If withdrawals do not meaningfully affect the total ETH staked, it would make sense to commence a new onboarding round (open up applications) around early June. If they do, it may make sense to wait a bit to see where the stake level settles, but I personally think that an onboarding would be useful regardless, it may just change the timing from early June to something like August.
Also, if possible to answer, what will be the main criteria for assessment(with Shapella upgrade are there additional criteria that LNOSG wants to assess further?) and how many will be selected for the next wave?
There’s no specific post-Shapella criteria that I can think of. In terms of how many would be in the new cohort, it’s difficult to say, as the primary driver is how TVL may be affected by withdrawals. IMO it should at least be enough such # of operators > percentage points of Lido stake share + little bit more to allow for growth before another onboarding round.
As a follow up to Izzy’s comments above, with the successful implementation of Lido V2 and stability in total stake delegated to the protocol, we believe it’s appropriate to launch the next Ethereum Node Operator onboarding round. Currently the majority of NOs are above the 1% soft cap of total ETH staked through Lido and there have been many requests from prospective NOs about joining the set.
Given the strength in inflows over the last month, some operators that joined during the 4th onboarding round now have an equivalent amount of active validators to the original Lido Node Operators. As a result, we propose to run a two part onboarding process to expedite adding new NOs to the protocol.
If there are no major objections, the overall application acceptance window would run from June 7 to July 5. First, we suggest an LNOSG evaluation should be held to evaluate Node Operators that re-apply and that received high scores in prior Lido on Ethereum LNOSG evaluations. This would hopefully result in 2-5 Node Operators being proposed to the DAO and onboarded onto mainnet by mid-July.
Applications would still be accepted during this time, and another LNOSG meeting would be held in the weeks following with the goal of proposing the addition of another 3-5 NOs to the DAO that would be onboarded onto mainnet in August.
Among the priorities of this onboarding round: 1. Improve client diversity 2. Onboard NOs not using public cloud as their primary server location and 3. Onboard NOs outside of the US and Europe (most overindexed geos).
While the size of the onboarding round will be discussed by the LNOSG and finalized by the DAO, a minimum of 5 (over the two “stages”) and up to 10 as a stretch seems reasonable to me. With new modules tentatively planned to be released by year end it makes sense to onboard a smaller number of NOs as stake will potentially be prioritized to flow to DVT or permissionless entry modules later this year.
Any feedback on the priorities and other aspects of the onboarding process would be appreciated. As a reminder, to learn more about the general onboarding process please see the Lido Node Operator Portal.
I wanted to express my appreciation for the proposal you shared with us. At Deutsche Telekom, we have been actively working towards becoming an eligible candidate for the next LIDO onboarding round, and your priorities align perfectly with the ones proposed.
Regarding the proposed priorities, I would like to provide some additional thoughts:
Client diversity and bare metal infrastructure are of paramount importance to us as well. We understand the significance of catering to a wide range of clients and providing them with a reliable and flexible service. Our commitment to delivering a robust and versatile infrastructure aligns perfectly with these priorities. One should also differentiate between hosting on hyper scalers vs smaller sophisticated Cloud Services such as the Open Telekom Cloud which is only being used by one node operator.
When considering server location, it is crucial to acknowledge both geographical and jurisdictional risks. For example, while Germany and Switzerland may be geographically close, their jurisdictional differences can have significant implications. Germany’s inclusion in the EU and Switzerland’s exclusion introduce variations in regulations and legal frameworks. We believe it is essential to recognize and factor in these jurisdictional considerations when prioritizing for server location.
Furthermore, we fully recognize the importance of ensuring the security of staked assets. A proven track record in running scalable Ethereum node infrastructure should be given strong emphasis when evaluating new node operators for the permissioned set. Deutsche Telekom is committed to upholding the highest standards of security and reliability to safeguard staked $ETH.
Additionally, I would like to suggest an additional soft priority: the experience of working with potential node operators through the recently launched community testnets. This hands-on experience provides valuable insights into the future working relationship and allows for better alignment of expectations. We believe that this collaborative approach will contribute to gaining insights into the potential partnership.
Thank you for considering these thoughts. We eagerly look forward to being considered as a reliable node operator and to contribute to the growth and development of the Ethereum ecosystem.
Thanks for the update Will and team. Spire is excited about the opportunity and plans to apply. We’re positioned in alignment with Lido’s onboarding priorities and look forward to contributing to the protocol’s continued growth.
The announcement thread for Lido on Ethereum Wave 5 Onboarding is here and the application form is now live in that thread as well as in the Lido Node Operator Portal.
