Leading Ethereum (ETH) liquid-staking protocol, Lido, has initiated its most significant network upgrade since 2023 as it consolidates 8 million ETH – worth approximately $16 billion at current market prices – onto Ethereum’s new post-Pectra validator design.
Lido’s largest upgrade in 3 years
On Monday, Lido deployed its most important protocol-level upgrade since V2 that was rolled-out in 2023. Specifically, Lido unveiled the Curated Module v2 (CMv2) upgrade, which seeks to cut Ethereum validator count by almost a third or around 33 percent.
By reducing the Ethereum validator count, the network’s consensus layer will see a huge pullback in transaction load. The consolidation of ETH worth $16 billion is not going to directly reduce gas fees or ensure rapid transactions. Rather, it will lead to a better network performance in the background.
According to Lido, the ETH consolidation alone is likely to cut attestation messages across the entire Ethereum network by roughly 29 percent per epoch. For the uninitiated, an epoch is a predetermined period of time or a specific number of blocks used to organize and synchronize a blockchain network.
The upgrade – as is evident by its name – will transition Lido’s professional node operators to Curated Module v2. This will be the first time in Lido’s history that operators in the curated module will be required to back their performance with locked ETH bonds.
The significance of the aforementioned condition is that it will add a financial penalty to a system that has historically relied on reputation and track record. Commenting on the development, Isidoros Passadis, chief of staking at Lido Labs Foundation, said:
“This is the biggest change to how Lido Core staking works since Lido V2. The node operators securing the majority of ETH staked via Lido are consolidating onto far fewer validators, and for the first time, they’re backing that stake with their own capital, leaving the validator set underpinning Lido Core much leaner and better secured.”
It’s worth highlighting that ecosystem builders had previously shown skepticism on whether enforcing capital bonds could potentially repel established node operators. However, Lido confirmed that all 34 of its existing curated operators are likely to transition to CMv2, with none planning to leave.
LDO to go higher?
Following a major network upgrade, the underlying token of the concerned network usually tends to perform well. The same holds true for Lido’s LDO token, which recently broke through its June lows.
In an X post on Monday, crypto analyst Crypto Lupin shared their thoughts on LDO’s recent price action. The analyst said that the digital asset is currently trading within a major descending trendline.
Sharing the above chart, Lupin added that LDO has posted 5 consecutive weekly green candles. If the bullish momentum holds, then LDO could be primed for a major rally, potentially eyeing the $0.67 price level in the coming weeks.
