Lido has rolled out a major upgrade to its Ethereum staking infrastructure, introducing Curated Module v2, a change designed to improve validator efficiency, strengthen operator accountability, and support larger validator balances.
The biggest update allows Ethereum validators using Lido to increase their effective balance from the traditional 32 ETH limit to as much as 2,048 ETH. This is made possible through Ethereum’s new 0x02 withdrawal credentials, which give validators greater flexibility while remaining within Ethereum’s staking framework.
Lido expects fewer validators on Ethereum
Lido believes the upgrade could significantly reduce the number of validators operating on Ethereum. Based on its current projections, the network’s validator count could fall from around 880,000 validators to approximately 628,000, a reduction of roughly one-third.
The protocol says this would make Ethereum’s consensus layer more efficient by reducing the number of validator messages that need to be processed and managed. However, Lido emphasized that these figures are estimates and that the migration process has not yet begun.
Importantly, the change is not expected to affect Ethereum users directly. Transaction processing, gas fees, and execution-layer activity should remain unchanged. Lido also confirmed that stETH holders do not need to take any action, as the migration will occur at the protocol level.
New accountability measures for node operators
Alongside the infrastructure improvements, Curated Module v2 introduces stricter requirements for node operators.
The upgrade adds:
- Bond requirements for operators
- New penalty mechanisms for poor performance
- Enhanced performance-based stake allocation
- Greater emphasis on ecosystem contributions and operational quality
Lido says future staking allocations may consider factors such as reliability, fees, and contributions to Ethereum’s ecosystem rather than relying solely on previous allocation methods.
The protocol describes these changes as part of a broader effort to improve security, decentralisation, and long-term sustainability.
Institutional adoption continues to grow
The upgrade comes as institutional interest in Lido’s staking services continues to expand.
Earlier this month, Anchorage Digital integrated Lido into its platform, allowing institutional clients to mint and redeem wrapped staked Ether (wstETH) while keeping assets inside a regulated custody environment. This enables institutions to gain staking exposure without moving assets outside their existing compliance and reporting systems.
Lido says demand from institutional investors has increased as staking infrastructure becomes more mature and regulatory clarity improves.
According to the Lido Ecosystem Foundation, the protocol has invested more than $4 million in smart-contract audits and has operated without a major smart-contract exploit since launching in 2020.
Governance and protocol evolution
The launch of Curated Module v2 is the latest step in Lido’s ongoing development strategy.
Earlier this year, Lido DAO proposed using treasury funds to buy back LDO tokens, arguing that the token’s market value did not fully reflect the protocol’s fundamentals. Despite revenue pressures during 2025, Lido remains the largest liquid staking protocol on Ethereum, holding roughly 23% of the market.
With Curated Module v2, Lido is aiming to make Ethereum staking more efficient, improve validator management, and strengthen its position as both retail and institutional demand for liquid staking continues to grow.
While the upgrade does not change Ethereum’s core staking rules, it represents one of the most significant operational updates to Lido’s validator infrastructure in recent years and could have a noticeable impact on how staking is managed across the Ethereum ecosystem.
