Proposal: Wind Down the Simple DVT Module Regular Clusters

Proposals
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This proposal seeks to wind down the 72 regular clusters in the Simple DVT Module (SDVTM) starting on July 1, 2026, ahead of the originally communicated up-to-three-year lifetime of the module. Operators in regular clusters will be offered a continuation path into the Community Staking Module (CSM), including via the Identified Distributed Validator Technology Cluster (IDVTC) operator type, paired with a one-time grant calibrated to whether the operator continues participating as a Lido Node Operator via CSM, or exits the protocol. Funds for the grant will come from the existing EGG request, with no additional funds required from the DAO to proceed with this grant.

This proposal does not affect the 10 Super Clusters, which would continue to operate validators, with a potential migration path to another module in the future.

Background

Since launch, SDVTM participants have played an important role in helping to battle-test and operationalize DVT within Lido under an intentionally early-stage model that required flexibility and sustained operational commitment from participants.

While the module has achieved important technical and ecosystem goals, the regular-cluster operating model has proven difficult to sustain as a long-term steady-state mechanism. Participant economics have become increasingly challenging under current staking conditions, contributing to operator churn within clusters, which in turn requires recurring coordination and intervention to maintain continuity.

While the original intention for the Simple DVT Module was to be a precursor to more scalable DVT modules such as the SSVLM, this did not come to fruition given the economic and coordination challenges associated with operating multi-operator DVT clusters. This is not to say that there is not significant value in DVT: there are a multitude of benefits related to the resilience, decentralization, and anti-slashing properties it provides. However, given current staking economics, it is challenging to coordinate a significant number of individual parties that are operating DVs for a multitude of reasons.

With alternative participation paths for DVT available through CSM, and improvements such as the new IDVTC type, and potential for an 0x02 CSM Module, contributors believe it is reasonable to wind down the regular-cluster model while supporting affected operators through migration support and a grant.

When the SDVTM was first proposed, the regular-cluster model was framed as having a lifetime of three years. The first validators were activated on May 1, 2024, which would put the natural end of that window around May 1, 2027.

This proposal seeks to bring that end date forward to July 1, 2026, for the following reasons:

1. The regular-cluster model has become operationally expensive to maintain. Lido DAO NOM Contributors have coordinated 23 operator set rotations to date, either through reshare ceremonies or full cluster restarts (full exit and re-deposit). 11 of the 72 regular clusters currently require further rotations, and that number is expected to keep growing under current market conditions.

2. Challenging economics for participants. Each operator in SDVTM regular clusters receives 1% of staking rewards for 80 validators, as the 10% protocol fee is split between seven participants, the DVT provider, and the DAO. With current ETH/USD levels, per-validator rewards compressing as total ETH staked grows, and many cohorts having spent time waiting for validator deposits or in the entry queue, a meaningful portion of the participant base is at or near break-even on the time and capital they have committed. That dynamic is driving operator churn, and generating very significant overhead in terms of operator rotations.

3. SDVTM is the lowest-margin module in the protocol.

  • Regular clusters: 2% DAO fee
  • Super clusters: 4% DAO fee
  • Module-level effective rate: 2.956% DAO fee

This compares to other modules of the protocol with an above 6% average DAO rewards fee rate. While this margin was acceptable in a stronger staking market at the formation of the module, given declining per validator rewards, challenging ETH/USD prices, significant operational costs, and a more permissionless and self-serve solution in CSM, winding-down the regular clusters at this time seems prudent.

Continuation Path: IDVTC in CSM

Operators in regular clusters who wish to continue participating in Lido will be directed to the Community Staking Module. All Node Operators are eligible to participate in CSM, as it is a permissionless module, by either running validators as individuals, or as members of a multi-participant DVT cluster.

Home and Community Stakers coming from SDVT will be eligible to claim the ICS Type if they have not done so already, which would also make them eligible to operate validators via the Identified Distributed Validator Technology Cluster (IDVTC) operator type if they would like to continue running DVs as part of a cluster. In addition, Professional Node Operators will be eligible for participating as an IDVTC cluster without receiving the ICS type, however will be required to coordinate the formation of the cluster with Lido Contributors. This will allow Home and Community Stakers to continue working with Professional Node Operators as a part of a DVT cluster in the CSM. More details on the Community Stakers Identification Framework.

For Node Operators that would like to participate in CSM under the IDVTC type, NOM contributors will help facilitate the initial matching of participants that opt-in, however cluster formation, operations, and liabilities will be self-directed by participants. All Node Operators may also run multi-operator DVT with the default permissionless type in CSM.

As approved in the recent Snapshot vote, IDVTC parameters are shown below:

Key parameters:

Parameter IDVTC
Node Operator reward 3.5% for first 64 keys; 2% for subsequent keys
Bond 1.5 ETH for the first key; 0.5 ETH for subsequent keys
Priority queue Up to 40 keys per cluster lifetime via priority queue (lower priority than ICS); remainder via general queue
Strikes 2 strikes until key exit; 4-month strike lifetime
Validator cap None

Grant Framework

Node Operators not participating in a Super Cluster would be eligible for a grant paid over two periods, with the amount depending on whether the operator continues operating as a Node Operator for the protocol via CSM. Funds for the grant will come from the existing EGG request, with no additional funds requested from the DAO. The grant requires continued support by Node Operators throughout the entire process of winding down the clusters.

Qualified Node Operators would be eligible to be granted 0.175 ETH (equivalent to approximately 3 months of expected rewards in a regular cluster slot). An additional 0.175 ETH would be granted to Node Operators that participate as either an individual Node Operator or member of a DVT cluster within CSM at the end of 2026, with a required 3 months of active validation at the time of the grant in December 2026.

Rationale

The 3-month base grant recognizes that operators in regular clusters were onboarded under a stated up-to-three-year lifetime, with some cohorts facing challenging economic periods driven by key-limit ramping, a lack of net protocol inflows, and entry-queue wait times.

The additional 3 months for operators continuing into CSM is intended to offset transition friction (cluster self-coordination, posting bond, key submission and queue time) and to encourage Node Operators to continue to participate as part of the Lido protocol.

As of April 30, 2026, approximately 31 SDVTM operators are actively operating validators in CSM, of which 21 currently hold ICS status. These operators would be eligible for the continuation grant tier assuming they continue to operate validators via CSM through year-end.

By proceeding with providing the grant for participating Node Operators, the DAO can show support for these users that invested time and resources in the protocol.

Timeline (Assuming Proposal is Accepted)

  • May 18: Proposal posted for discussion
  • June: Proposal moved for Snapshot vote
  • July: Simple DVT clusters wind-down (*)
  • August: Initial grant of 0.175 ETH awarded to all non-Super Cluster Operators
  • December: Second grant of 0.175 ETH awarded to all eligible legacy SDVTM CSM participants

(*) Note. Most SSV clusters currently have a runway extending to approximately June 28. Because runway top-ups are no longer possible unless clusters have migrated to ETH-denominated fees on SSV Network, operators in these clusters would start the process slightly earlier, so that it is finalized on June 28.

This timeline is subject to refinement based on community input and Aragon vote scheduling.

Acknowledgement

The decision to put forth this proposal is not being taken lightly. While Simple DVT continues to operate well for some Node Operators, for many, the economic reality of splitting rewards for 80 validators with current ETH/USD prices is not feasible.

When the Simple DVT Module was originally proposed, it was intended to be replaced by other DVT-enabled modules. While there was discussion and initial development towards these efforts with both DVT providers, the economics of a scalable DVT module were unable to be justified in a staking ecosystem where inflows to decentralized staking protocols have markedly slowed vs. 2023.

The proposed remediation of a path forward in CSM plus the proposed grant seeks to acknowledge the tremendous efforts put forward into participating in this module by many of the SDVTM participants over the past two years.

Next Steps

This proposal is now open for DAO and community discussion. Pending potential updates to the proposal, it is suggested that this topic be moved forward to Snapshot vote in June. Please feel free to share any questions or comments below.

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Thanks for putting this forward — having an explicit timeline is helpful.

My situation. I currently operate three Simple DVT clusters: one Super Cluster (Obol) and two regular clusters (one Obol, one SSV). The infrastructure is already on a low-cost server I run, so my marginal cost of continuing is effectively zero. My preference is to keep validating Lido stake at the largest footprint I can, and I have already submitted an ICS application as the obvious bond-free continuation path. A few policy questions before I shape my transition plan:

  1. Grant eligibility for operators who participate in both a Super Cluster and regular clusters. The proposal reads:

    “Node Operators not participating in a Super Cluster would be eligible for a grant paid over two periods … 0.175 ETH (equivalent to approximately 3 months of expected rewards in a regular cluster slot).”

    The wording supports two readings:

    • Operator-level disqualification: any participation in a Super Cluster excludes the operator from the grant entirely, even for regular-cluster positions that the operator does lose at wind-down.
    • Position-loss compensation: the grant compensates for income lost when a regular cluster is wound down; Super-cluster participation does not affect that loss, so the operator should still qualify for the regular-position portion.

    The economic logic of “3 months of expected rewards in a regular cluster slot” suggests the latter, but the criterion is phrased at the operator level. Could you clarify the intent for operators who hold both classes of position?

  2. Per-operator vs per-cluster grant. For an operator who holds multiple regular-cluster positions being wound down, is the 0.175 ETH grant paid once or once per cluster position? The singular ETH amount calibrated to one slot’s reward implies once, but I’d like to confirm.

  3. December grant — Super Cluster + CSM combination. The December tranche (“Node Operators that participate … as a member of a DVT cluster within CSM … with a required 3 months of active validation”) does not explicitly carry the Super Cluster exclusion. Given the recent acknowledgement in Discord (Lido x SSV: Arid Anubis thread, 18 May) that “if no other action is taken, the [Super] clusters would be wound down in May 2027”, the long-term wind-down picture is the same for both classes of cluster — only the timeline differs. With that in mind, is a Super Cluster operator who also enters CSM (e.g. via the ICS → IDVTC path the proposal frames) eligible for the December 0.175 ETH for their non-Super wind-down contribution, or is the same operator-level exclusion intended?

  4. Super Cluster intake during rotations. The team has coordinated multiple operator rotations to date. For operators with a clean Lido track record but no ETH capital to post a CSM/IDVTC bond, is there a path to be considered for open seats in Super Clusters during ordinary rotations? If yes, how should one express interest, and is Find a DVT Cluster Mate! the right place — or is there a dedicated process?

Happy to support the wind-down as defined either way — I’m already in the ICS queue and intend to look for IDVTC partners — but full visibility on the policy will help me plan correctly.

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Hey — Hawk (Obol) and Penguin (SSV) operator here. The IDVTC + ICS continuation path makes sense overall. Two questions where I think the proposal could be clearer:

  1. What do IDVTC economics look like in steady state? You’re open about regular-cluster operators being at or near break-even today, and the 0.175 ETH transition grant works as a bridge — but a rough per-validator or per-cluster reward projection for an IDVTC slot would really help. It would let operators do an honest apples-to-apples comparison against current SDVT cluster earnings and decide between full IDVTC participation, solo CSM, or stepping back.

  2. The “3 months of active validation” clock — when does it start for the December continuation grant? From validator activation (post entry-queue), operator registration, or key submission? Entry queues can run 1–3 months, so the start point materially changes who actually hits the December cutoff.

Already in the ICS pipeline (applied May 6), planning to continue via IDVTC. Thanks for the detail in the proposal.

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@ColinkaMalinka Thank you for the questions, I’ll clarify them below:

  1. On grant eligibility - the intent is to exclude all operators that are part of a Super Cluster from the Grant Framework. The grant is meant to support participants in regular clusters through the transition, whereas Super Cluster participants would still continue to operate validators.

  2. On the per-operator vs. per-cluster question - if an operator is part of multiple regular clusters, the 0.175 ETH grant would be paid only once. The grant would therefore be per operator, not per cluster slot.

  3. For the December tranche, the same logic as above applies: Super Cluster operators would not be eligible for the Grant Framework.

  4. On operator rotations - whenever an operator wound down their operations, the replacement operators have historically come from the previously approved backup list proposed by the Lido Node Operator Subgovernance Group (LNOSG). Selection was based on operators having demonstrated the ability to run performant nodes in the SimpleDVT Module, with consistent responsiveness and engagement, their infrastructure geolocation, and the participation in other clusters.

Please note that the LNOSG has now transitioned to the Curated Module Committee (CMC).

Appreciate your support and happy to hear that you’re already planning to participate through CSM. Please let us know if you have any other questions, thank you!

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Hey @hukutu4.eth! Thanks for the questions, let me answer below:

  1. It’s difficult to provide a single number, as the economics depend on several variables (some really hard to predict): ETH/USD price, DVT provider fees and incentives, Ethereum staking APR, and the number of validators that the cluster decides to run.
    The Snapshot vote includes the main parameters approved for IDVTC and an indicative chart with the capital multipliers, though it does not account for the DVT provider fees or incentives.

  2. Three months of active validation would be required at the time of the grant in December 2026. The idea behind the six months of time in between the 2nd tranche of the grant is to take into account the extended entry queue and also allow time for deposits to flow to CSM.
    One clarification on this: the Grant Framework only requires participation in CSM under any operator type, so it does not necessarily have to be under the ICS/IDVTC operator types.

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Thanks @Remus, that’s clarifying — point 1-3 noted (operator-level
disqualification, per-operator grant, same exclusion in December). I’ll
plan accordingly.

On point 4 — could you say a bit more about the backup list mechanics?
Specifically:

(a) Is the backup list managed by the CMC now (post-LNOSG transition), and
is there a public application/expression-of-interest channel — or is it
purely curator-initiated based on observed track record?

(b) For operators who already hold one Super Cluster position via an
organization (the BeeHive collective holds Divine Dragon via shiny-hill
and Ethereal Elf via Mav3rick) — does NOSG/CMC count those operators
as same-entity for backup-list purposes, or are they evaluated
independently?

(c) Any rough cadence on how often rotations actually open seats? The 23
rotations mentioned in the proposal — is that ~1/month, episodic, or
something else?

Thanks again for the responses.

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@ColinkaMalinka 1. Yes, after the transition from the LNOSG, the SDVT-related operator rotation processes fall under the CMC. Historically, all operators in the module have been considered for the backup list, based on the criteria I’ve mentioned above. More details on the CMC <> SDVT Module operations in the forum post.
2. Operators from the ‘Community Staker’ category have been treated as separate participants when onboarding, so I believe that the same approach will continue to apply.
3. Those 23 rotations mentioned in the proposal happened since launch, across both SSV and Obol clusters, but there is no fixed cadence for rotations, as they are driven by operators withdrawing from clusters. The CMC also has the ability to add or remove participants using the backup list or the broader operator pool, although I do not currently expect significant changes to SDVT clusters.

Thank you!

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Thanks Remus. One more practical question: what’s the application
channel for the backup list? Forum post, Discord DM, dedicated form?
Want to make sure I’m in queue ahead of any rotation that opens up
after the regular cluster wind-down on July 1.

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@ColinkaMalinka As I’ve described above, there isn’t an application process for this (historically, all operators in the module have been considered for the backup list), and going forward this now falls under the responsibilities of the CMC.

Just to reiterate, I do not expect major changes to the remaining clusters, but if there is ever a need for a wider selection, there will definitely be public communications and announcements from the CMC.

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I understand the rationale behind winding down the Simple DVT clusters.

As an existing operator, I have already invested in dedicated hardware and have operational experience within the SDVT ecosystem, including participation in an Obol cluster (operator maxim101 / fabulous-yesterday).

While participation through CSM remains an option, SDVT participation is particularly valuable for operators who have already invested in infrastructure and demonstrated reliability within distributed validator environments.

Could the CMC clarify whether operators from the winding-down Simple DVT clusters will receive any consideration for future SDVT cluster rotations, backup pools, super clusters, or other SDVT-related participation opportunities?

It would be helpful to understand how existing operators with proven performance and prior infrastructure investments fit into the long-term SDVT participation framework after July 1.

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Hi Maxim, I think this has been appropriately answered by Remus above. It is very unlikely there will be changes to the Super Clusters that would require a significant number of rotations. If there are rotations, the CMC would assess Node Operators from the pool of Node Operators that have participated in Simple DVT.

To be clear, there are not plans for a long-term SDVT participation framework after the wind-down. The Super Clusters may have the option to migrate to another module in the future, or they may be wound-down. Outside of that, there are no other plans being considered for the Simple DVT Module at this time.

The operational load of coordinating a large number of DVT clusters is something that we are looking to move away from, and we are lucky to have great systems in place via the CSM to allow Node Operators to continue running DVs as part of clusters there with market-leading competitive bonding rates.

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I understand your point. But for most home operators, it will be difficult to raise the necessary amount for a CSM deposit to reach even 80 keys (for the entire class). Could you consider offering customized deposit terms for experienced operators with good performance (for example, 0.07-0.1 ETH per key)?

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Such low bond will not be sustainable from the protocol security perspective in the permissionless and non-curated module. So it is impossible.