Ethereum News
Lido’s stETH centralization: separating myths from client diversity
Lido manages 9.65 million ETH. I dismiss the idea that Lido is approaching a 33% monopoly. Lido’s share of total Ethereum staking fell from 32.3% in late 2023 to 24.4% in August 2025 and reached 21.18% in the first half of 2026. The protocol’s TVL sits at approximately $23.8 billion. Lido takes 10% of staking rewards as a fee. The market grew faster than Lido. I have watched this expansion closely. The Community Staking Module (CSM) reached its 5% stake share cap following the v2 upgrade. This module added 377,664 ETH on an annual basis, showing 29.35% quarter-over-quarter growth. Of 412 active operators in CSM, 345 qualify as ICS. This module accounts for 2.2% of total Ethereum stake. This is a 3x increase from the end of 2024. The 36 Curated Node Operators each operate 6,967 validators. This stays well below the 1% soft cap. CSM offers potential rewards that can reach 2.37 times higher than traditional solo staking. CSM requires a bond of 1.3 ETH for most participants.
DVT powers 22,233 validators.
Client diversity in the Lido set
Pectra raised the maximum effective balance to 2,048 ETH via EIP-7251. Lido moves 8 million ETH, worth $16 billion, onto 0x02 validators. This shift raises 0x02 usage from 32% to 52%. No consensus client in the Lido validator set exceeds 33%. In the Curated Module, Nethermind holds 39% and Geth holds 37%. Besu accounts for 18.7%. Reth and Erigon together account for 5.3%. In the Simple DVT Module, Nethermind leads with 54.51%. In the CSM, Nethermind is 60% and Geth is 21%. Besu is 14% and Reth is 3%. Erigon is 1%. Pectra also introduced EIP-7002, which allows execution-layer triggered exits. EIP-6110 provides a more secure way of delivering deposits from execution to the consensus layer. EIP-7691 increases the target blob count to 6 per block. Pectra also improved deposit activation time to approximately 13 minutes. The minimum staking amount remains 32 ETH. Institutional stakers can now consolidate thousands of validators into a single entity. This consolidation reduces the total validator count on Ethereum by one third.
| Module | Leading Client | Secondary Client |
|---|---|---|
| Curated | Nethermind (39%) | Geth (37%) |
| Simple DVT | Nethermind (54.51%) | Lighthouse (52.63%) |
| CSM | Nethermind (60%) | Geth (21%) |
I skip the myths.
The KelpDAO exploit
The KelpDAO bridge exploit in April 2026 left RSETH underbacked. One Lido EarnETH vault held 9% exposure to this underbacked asset. I find these secondary risks troubling. In May 2025, a Chorus One oracle key compromise resulted in the theft of 1.46 ETH in gas fees. Since the Pectra upgrade, Lido has used its 0x02 validators to consolidate massive amounts of stake while still maintaining a client distribution where no single consensus client holds a supermajority. In September 2025, Kiln conducted precautionary out-of-order validator exits during a security investigation. Lido’s total revenue fell by 23% to $40.5 million in 2025. This decline followed shifts to Ethereum’s staking ecosystem and lower staking yields. I see competition from Rocket Pool and Frax Finance. Rocket Pool allows anyone to run a validator node by posting 8 ETH plus RPL collateral. Frax Finance integrates liquid staking with its algorithmic stablecoin ecosystem. Lido takes 10% of staking rewards and splits it between node operators and the treasury. Lido remains largest.
