Lido’s 28% Ethereum staking dominance and modular upgrades

Modular Staking and the Staking Router

The Lido V3 upgrade deployed stVaults to the Ethereum mainnet on March 15, 2025. These stVaults function as isolated staking environments that decouple how ETH stays staked from the liquidity layer. This design allows teams to run custom validator configurations. They can mint stETH while staying connected to the existing liquidity network. This architecture allows Layer 2 networks to embed staking directly into user flows. The development of stVaults followed a phased rollout that began with feature announcements in February 2025 and concluded with successful mainnet integration on March 15, 2025, after extensive testing with partners. In July 2026, a bug in the AccountingOracle during the Staking Router v3 rollout caused an issue. The glitch omitted a 32 ETH validator deposit. This error caused the daily stETH rebase to show an incorrect 2.04% APR. The deviation remained within the 0.5% error tolerance for the clBalanceOraclesErrorUpperBPLimit. The upgrade also introduced new parameters for the Deposit Security Module. The maxOperatorsPerUnvetting parameter limits the number of operators involved in unvetting to 200. This limit keeps the maximum transaction cost below 4,000,000 gas. The Staking Router v3 also modifies deposit flows and allows validators with effective balances up to 2,048 ETH.

Rebalancing and Node Operator Diversity

Lido manages concentration risk through rebalancing and strict validator limits. The protocol moved 4.1 million ETH away from centralized node operator concentration risk. The Curated Module uses 36 node operators to manage the largest portion of the stake. Each operator handles 6,967 validators. This allocation accounts for 0.71% of all Ethereum validators. In December 2025, A41 decided to wind down all node operations. Pier Two received 3,200 additional validators, which brought its total to 6,966. These changes help distribute stake across more independent operators. The Curated Module shows a Gini coefficient of 0.001 and an HHI of 0.0278. The LDO token experienced a rally as traders anticipated protocol upgrades. LDO reclaimed its 50-day EMA at $0.2992. LDO futures Open Interest jumped 32% to $75.4 million. Will the concentration in the Curated Module eventually fall below the 1% soft cap as more operators join the CSM?

Decentralized Modules and DVT Scaling

Decentralized modules like the Community Staking Module (CSM) and Simple DVT Module (SDVTM) expand the validator set. The CSM reached its 5% stake share limit in December 2025. It added 377,664 ETH over the year. The CSM uses a 6% fee for the module and gives 4% to the treasury. It allows 30 deposits per block with a minimum 25 block distance between deposits. The CSM includes 345 Identified Community Staker (ICS) operators. These operators help diversify the validator set. The CSM also has a 1% stake share limit. The SDVTM target stake share increased to 4.3%. Distributed Validator Technology (DVT) powers 22,233 validators, which is 711,456 ETH. This is a 537,792 ETH increase from the previous year. Obol utilization in the Curated Module grew from 100 to 1,100 validators. SSV Network utilization in the same module grew from 4,800 to 7,550 validators. The ICS framework offers 6% rewards for the first 16 validators and deposit priority for the first 10 validators.

Comparing Liquid Staking Models

Lido leads the liquid staking market with over 30% market share. It provides stETH, which is a rebasing token. The balance in a user wallet increases daily as rewards reflect in the token. Users can also use wstETH, which keeps a fixed balance and increases in value against ETH. Lido takes a 10% fee from staking rewards. You should know that stETH can trade below the price of ETH. Rocket Pool uses a permissionless model with 8 ETH bonds. Rocket Pool takes a 15% fee for node operators.