Understanding Lido V2: support for unstaking ETH, introducing a new modular architecture design

Original title: " Introducing Lido V2—Next Step In Decentralization "

Original Source: Lido

Original Compilation: The Way of DeFi

2 On July 7th, Lido officially released the Lido V2 proposal, which is the largest upgrade of the protocol so far, which will allow stakers to unstake their ETH from Lido, while the new modular architecture design brought by the Staking Router It will also achieve further decentralization of the Lido validator ecosystem.

Technical contributors to the Lido protocol have proposed Lido V2 - the biggest upgrade to date for the Lido protocol and a step on the road to further decentralization Change.

The two main points of this upgrade are:

Staking Router: Thanks to the new With its modular architecture design, anyone can develop on-ramps for new node operators, from independent stakers to DAOs and Distributed Validator Technology (DVT) clusters. Together, they will create a more diverse ecosystem of validators.

Withdrawal: This comprehensive Ethereum Lido protocol upgrade will allow stETH holders to withdraw ETH from Lido at a ratio of 1:1, realizing real access to Ethereum A key milestone for the Fang staking ecosystem.

Lido aims to provide users with an alternative to centralized staking platforms, such as exchanges, while eliminating the technical and financial challenges of running a separate node. From the beginning to the end, the Lido protocol has insisted on providing its users with the highest standards of security and usability.

This proposal aims to drive a more inclusive, open and transparent platform while building on our core mission of making staking simple , as secure as possible, and keep Ethereum decentralized and censorship-resistant.

Next major upgrade

In the next few months, Ethereum will complete the Shanghai/Cappella hard fork upgrade. The upgrade enables withdrawals for all Ethereum stakers staked since the token chain launch.

The implementation of withdrawals achieves Lido's core goal of allowing users to stake and unstake freely. Given this freedom, this market will thrive on platforms that offer the best experience, security track record, and broader composability in the DeFi ecosystem.

The emergence of Staking Router and module-based validator set infrastructure will facilitate the development of the entire Lido on Ethereum as well as external third-party contributors.

The Lido protocol was an early adopter of liquid staking, initially using only BLS-based 0x00 withdrawal certificates (WC). As soon as the smart contract based WC became available, the Lido protocol immediately switched to the more secure 0x01 WC. Currently, a small percentage of validators (about 12%) are still using the 0x00 WC governed by the 6-of-11 threshold scheme.

To mitigate the risks associated with distributed custodians, these credentials can be rotated to smart contract based credentials through a ceremony. During this ceremony, participants will sign a rotation message, which will be broadcast to the consensus layer network.

The implementation of withdrawals coupled with the Staking Router proposal will help increase the decentralization of the network while contributing to a healthier Lido protocol and fulfilling expectations The long-standing ability to stake and unstake (withdraw) at will, strengthening stETH as the most composable and useful asset on Ethereum.

What is Staking Router?

Staking Router is a major protocol upgrade that moves the operator registry to the module A more scalable and composable architecture.

Staking Router will be at the heart of Lido's vision: as a platform where stakers, developers and node operators can collaborate frictionlessly to drive decentralization together The future of Ethereum.

Ethereum should be a reliable neutral home for applications and their users. The mission of Ethereum Lido is to provide a secure and accessible staking platform and contribute to the overall decentralization of Ethereum.

Lido is firmly committed to further diversifying its operator and validator set, which reduces the risk of downtime or censorship while maintaining network performance and neutrality .

Overview

Staking Router is a controller contract that allows Lido to facility evolved into an extensible protocol. This will work by essentially treating the various modules as pools of validators that can serve as potential supply for the protocol. Each module will be responsible for managing an internal operator registry, storing validator keys, and distributing stake and rewards among operators participating in that module.

Each module can include various types of node operators, from community stakeholders, to professional or emerging staking organizations, to DAOs, who can Run validators independently or collaboratively through infrastructure such as DVT. Additionally, node operators will be able to participate through several modules. In addition to product features, it could allow keys to be stored at L2 or off-chain, reducing protocol costs and increasing the potential number of node operators.

The modular architecture will facilitate faster experimentation with various node operator configurations. This will reduce some technical hurdles while speeding up the iterative process of expanding the set of node operators.

Staking Router is poised to benefit various stakeholders using Lido, including:

Stakers: They benefit from a more diverse and secure set of node operators, as their deposits will be distributed across more independent entities, reducing the risk of network downtime and increasing Ethereum's resilience.

Node Operators: Through the new module, other types of node operators, such as independent stakers, small groups, DAOs and professional node operators, will be able to increase The way they participate in the Lido protocol.

Developers: users will be able to propose and implement modules using different combinations of node operators and with various competitive features such as coverage options and fee structures, And apply to join the module set of Staking Router.

Staking Router integrates the Lido protocol in architecture Moving to an aggregator strategy encompasses a more diverse set of validators and opens up the possibility for different approaches, techniques, and greater overall flexibility throughout the protocol.

Additionally, the Staking Router will allow individual modules (and their respective subsets of validators) to operate with custom parameters, such as fees or collateral requirements, Thus adding more elasticity between validator sets.

Future direction of the pledge module

Currently, Lido uses a single NodeOperatorsRegistry contract, which is a Registry of curated node operators controlled by The DAO.

The Staking Router proposal will allow for the introduction of additional modules to support a more diverse operator base by utilizing mechanisms such as DVT, bonding and reputation scoring in order to There will be no permission to enter the set of node operators.

Community Module: Bonded permissionless node operators have an optional mechanism to effectively reduce deposit requirements based on reputation (e.g. based on successful performance).

Going forward, some of these modules may include:

- DVT Module: DVT-enabled Validators (with optional bindings), such as Obol's distributed validator set or SSV nodes.

- Off-chain or L2 modules: Reduce gas costs by pushing storage of validator keys to off-chain or L2 solutions.

To extend this, there can be many modules of the same type (or modules with overlapping types, e.g. DVT + Community) running in the same stake set. Each module will be able to express a specific purpose or theme through the types of operators they use to generate validators to add to the pool.

Finally, the Staking Router coordinates deposits and withdrawals to meet the DAO's required stake distribution and allows the Treasury's staking reward and stake distribution algorithm set by the DAO to control validation are assigned.

Withdraw

Withdraw will enable users to unstake their stETH for 1 :1 ratio to get pledged ETH.

Since withdrawal is a fundamental feature of liquid staking, we strive to make the best design that balances user experience and speed of operation with the security of the protocol .

Due to the inherent complexity of the Ethereum network design, in which the functions of the consensus layer and the execution layer are somewhat separated, the withdrawal mechanism proposed to be added to the Lido protocol design will There are two modes: Turbo mode and Bunker mode.

For a more detailed explanation of Lido withdrawals, including an in-depth look at Turbo and Bunker modes, see this technical analysis prepared by Lido protocol engineering contributors here.

Turbo Mode

This is the default mode to use unless something catastrophic or impossible The foreseeable situation affects the Ethereum network. In Turbo mode, withdrawal requests are quickly fulfilled using all available ETH from user deposits and rewards. The length of time to exit the network is indeterminate; however, in the best case, withdrawal requests can be processed within hours without validators exiting.

To make the process as smooth as possible, contributors have proposed automation tools for protocol and node operators. The tool will be used to help automate the process around validator exits, minimizing possible delays.

Bunker Mode

In order to process withdrawals in a catastrophic scenario, the Bunker Mode is propose. Its purpose is to prevent sophisticated participants from gaining an unfair advantage over other stakers by delaying withdrawals and negative socialization throughout the protocol.

Claimant Overview

Due to the asynchronous nature of Ethereum withdrawals, withdrawals It is recommended to proceed through the Request/Claim process.

Request: The user locks stETH as a withdrawal request. Execution: The protocol acquires ETH to fulfill the withdrawal request, locks those ETH, destroys the locked stETH, and marks the withdrawal request as claimable. Claim: Users can claim their ETH at any time.

The execution time is also uncertain. Expect a few hours at best, most requests should be under a week in most cases. However, in a worst-case scenario, it could be much longer.

It should also be noted that when users queue up to withdraw (and exit the staking network), they will not receive staking rewards.

Protocol upgrade safe approach

The code for this proposal to upgrade to Lido V2 has gone through The most rigorous scrutiny to date, with a total of seven separate independent audits.

Security is paramount and countless hours are spent on internal and external testing.

In accordance with the recently introduced audit policy, we have worked with several audit service providers to diversify and thoroughly safety assessment. Some of them are long-term partners, while others will contribute to Lido security for the first time.

Find a full list of confirmed audit service providers below:

Sigma Prime will Review the updated dc4 bc version designed for the 0x00->0x01 withdrawal credential rotation ceremony.

ChainSecurity will be among the first auditors to scrutinize the Staking Router code in January. ChainSecurity's work will be used to identify potential weaknesses in new critical protocol parts before they are incorporated into the final protocol upgrade code.

Oxorio will be auditing the protocol enabling the Ethereum withdrawals codebase in February-March.

Statemind will be auditing the protocol enabling the Ethereum withdrawals codebase in February-March.

HEXENS will be auditing the protocol enabling the Ethereum withdrawals codebase in February-March.

The MixBytes () Camp Security Audit Competition for Protocol Smart Contracts is scheduled for February-March.

Certora will be the ultimate contributor to protocol upgrade security, in Full protocol audit and formal verification available in February-March.

A complete list of audits performed on the Lido codebase, along with detailed reports, can be found in a dedicated public GitHub repository‌.

Release Details

The following is a rough timeline, not final, and Subject to change.

Early February:

Code Freeze and Security Audits Begin.

End of February:

Signal snapshot vote on upgrade to pre-commit "upgrade parameters" and overall design support for the DAO.

Early March:

Goerli testnet launched. Complete testing of all code (on-chain and off-chain), Oracle & NO automation.

March/April:

Withdrawal certificate rotation ceremony (0 x00 -> 0 x01). Protocol upgrade before hard fork. Mainnet contract deployment. Aragon on protocol upgrades. The planned Shanghai/Capella hard fork.

Lido V2 opens up the development ecosystem to external contributors from all corners of the Ethereum ecosystem.

The rollout of Staking Router's modular features will come over time, initially prioritizing community and DVT-based modules.

Soon, community developers, project teams, and researchers will be able to contribute directly to Lido by proposing a Staking Router module that will be vetted by the DAO.

After the upgrade, Lido DAO invites you to join our research forum where further updates will be posted for collaborative proposals. The Lido protocol is designed to foster and support external contributors wherever possible.

Conclusion

As stated here, the mission of the Lido protocol is to make staking simple and secure, while maintaining the decentralization and censorship resistance of Ethereum.

In this case, the Staking Router is a key milestone towards the goal of cultivating the best validator set for Ethereum - it will not compromise on quality, Compromise on security or decentralization.

Over the past two years, the Lido protocol has grown in stature, becoming an integral part of the Ethereum ecosystem and the entire DeFi space. To date, over 100,000 unique staker addresses have deposited over 4,815,040 ETH into the Lido protocol, underscoring the massive success of the goal of democratizing access to staking.

The Lido protocol's commitment to trustless staking, democratizing the network, and enhancing the resilience of the Ethereum protocol remains as strong as ever. With the launch of Lido V2, the Lido Protocol looks forward to sharing more information with our growing community of users, node operators, and LDO holders.

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