Lido, a well-known liquid staking protocol, aims to revolutionize Ethereum’s proof-of-stake logic through a major update to the cryptocurrency.
The project has just released a community staking module. This allows anyone to become a network validator by simply making a commitment. 2.4 Ethereum.
Until today, running a validator node on Ethereum required 32 ETH.
This solution could allow for easier access to consensus and further decentralization within the network.
Let's find out more below.
Lido Enables Community Staking Module in Ethereum Crypto Ecosystem: 2.4 ETH Validators
Lido, the famous $25.2 billion LSD protocol, just voted to release and enable a much-talked-about crypto upgrade.
let's talk about “Community staking module”(CSM)'s governance proposal was published on October 22nd and completed just two days later.
Thanks to positive voting results from the community, the update will soon be applied to Lido and introduce special benefits.
First, This will allow individual users to run validator nodes on the Ethereum PoS blockchain without the need for a threshold. 32 Ethereum.
Instead, an initial minimum requirement of 2.4 ETH will be introduced, with initial validators staking only 1.3 ETH.
Additionally, those who qualify for the early adopter phase will be able to take advantage of this feature by locking up their cryptocurrency with a stake of 1.5 ETH.
Lido’s community staking module greatly reduces Ethereum staking obstacleseliminating technical expertise and financial barriers.
CSM closely aligns with the vision of Ethereum co-founder and solo staker Vitalik Buterin, who plays a key role in making the network more resilient.
Increased staker independence will allow crypto networks to become more diverse in terms of operators and better able to fend off potential censorship attempts.
The testnet phase of this upgrade began on July 1st on the Holesky chain and continued for the next three months.
During this process, more than 370 unique node operators participated, including 70 individuals.solo stakerFor the first 10 days.
With CSM approved by the community, Lido is expected to significantly increase the number of node operators using this protocol.
Current barrier to entry for validator nodes is 32 ETH
Currently, to participate in running validator nodes on Ethereum without going through the cryptographic protocol Lido, You need at least 32 ETH.
As part of the Proof-of-Stake consensus mechanism, users who wish to participate in securing the network and earn yield at the same time must stake a minimum amount set at exactly 32 ETH.
Currently, there are over 1 million validators on the Ethereum network, with a total of over 34 million ETH staked. Yield is 3.1%.
Having a minimum requirement of 32 ETH primarily serves to encourage whale participation. A lower threshold requires the involvement of more individual validators, placing more strain on the network during the entry and exit phases.
But on the other hand, Such a high amount, equivalent to $82,000, creates a strong barrier to entry for small users.
A wide range of people in the cryptocurrency industry don't have significant amounts of ETH and are forced to stake it through third-party services such as the LSD Protocol.
In doing so, small fish must necessarily concentrate around large staking pools and centralize their networks in order to enjoy the interest on their deposits.
This issue has been discussed several times in the Ethereum community in the past, but no definitive solution was reached.
But now it appears to be at a tipping point.
The new CSM upgrade lido It cuts through this inefficiency and opens the door to a network of validators for small investors.
This increases the decentralization of cryptographic networks, which in turn improves security and resilience.
In addition, the new module also supports the thriving global community of solo stakers through the Community Lifeguard Initiative and provides an educational contribution.
As confirmed in a press conference by Lido protocol collaborator and technical manager CSM Dmitry Gusakov:
“We want to break down barriers and allow everyone to contribute to securing Ethereum, regardless of their financial situation or technical skills.”
Lido still leads liquidity staking sector, but cryptocurrency LDO suffers from price decline
According to data from Dune Analytics. Lido still appears to be dominating the Ethereum crypto staking market despite declining numbers.
The protocol holds a market share of 27.92% with 9.75 million ETH deposited through the same middleware.
This means that one in almost three validators on the Ethereum network is fully controlled by Lido.
The platform boasts a TVL of $25.6 billion, making it the richest DAPP in the DeFi ecosystem.
In any case, after July 2022, lido consistently lost ground and ended up giving up 5% of its market share to competitors.
This situation has contributed to the expansion of the restaking sector and introduced important players to the market such as Etherfi, Renzo, and EigenLayer.
To give you a little insight into the ongoing trends, in the last 7 days, EigenLayer’s AigenPod introduced 62,000 ETH to the Beacon Chain.
During the same period, Lido experienced an outflow of 22,000 ETH, highlighting the even greater attractiveness of the latest generation protocol.
Meanwhile, LDO, Code of lido governance, have to face significant price declines.
Last year, the currency's value fell by 38%, falling from $1.8 to its current $1.1.
After a sharp rise in price reaching $3.8 in early 2024, the bears reasserted themselves and caused a sharp decline.
From September onwards, the contraction phase seems to have subsided and the trend has leveled off.
While it is not excluded that LDOs may offer superior returns in a bull market, the current scenario is far from bullish.
For the first sign of recovery, the cryptocurrency should at least return above $1.6 and continue rising thereafter.
As of this writing, LDO has a market capitalization of $1 billion, which is 25 times smaller than TVL, the same Lido protocol.