Lido has rolled out its Core 2026 upgrade, adding native 0x02 validator support to its primary staking module, reshaping node operator incentives around ETH-backed bonds, and initiating a consolidation process that is expected to cut the total number of Ethereum validators by about one-third.
Stakers don’t need to take any action, as all changes are implemented directly at the protocol level.
This upgrade arrives at a pivotal time. Ethereum’s Pectra hard fork introduced EIP-7251, increasing the maximum effective validator balance from 32 ETH to 2,048 ETH through 0x02 withdrawal credentials. However, adopting this feature required coordinated updates across staking infrastructure.
Lido’s Core upgrade represents the largest implementation of this new validator framework so far.
Curated Module v2: A Structural Redesign
Since launching in 2020, Lido’s Curated Module has secured around 90% of all ETH staked through the protocol. With Curated Module v2 (CMv2), native 0x02 support is now integrated, allowing more than 265,000 existing validators to migrate from legacy 0x01 credentials through consolidation.
As a result, the proportion of ETH held by compounding validators increases from 32.06% to 52.21%. At the same time, Ethereum’s total validator count is expected to drop from roughly 880,000 to about 628,000—cutting attestation messages per epoch by approximately 29%, according to Lido.
This reduction has network-wide implications. Lower attestation volume decreases the computational and networking burden across the entire consensus layer, benefiting all validators—not just those within Lido.
In effect, fewer validators translate to a more efficient beacon chain, regardless of any single protocol’s share.
The CMv2 rollout is happening in two stages. Phase 1, now active, includes 0x02 validator support, operator categorization, bond-based security, and simplified governance processes. Phase 2, still in development, will introduce flexible stake allocation, customizable operator fees, and a performance-based strike system—pushing Lido toward a more market-driven operator ranking model.
Operator Incentives: Introducing Bonded Accountability
One of the most notable changes is the shift in how node operators are held accountable. Previously, the Curated Module relied largely on reputation—operators were expected to perform reliably and compensate for any losses, but without locked collateral to enforce this.
CMv2 changes that by requiring ETH-backed bonds, ensuring operators have financial exposure tied to their performance. These bonds cover risks such as downtime, underperformance, slashing penalties, and violations tied to execution-layer rewards.
In parallel, Lido has introduced a Node Operator Type Framework that categorizes participants based on their contributions. These include Decentralization Operators, who enhance geographic and client diversity; Extra Effort Operators, who contribute capital and participate in governance or security roles; and Public Good Operators, such as developers working on Ethereum clients.
Seven client teams have already been added as curated node operators. As of July 1, 2026, they had collectively earned 8,710 stETH—worth around $21 million—in staking rewards, according to Lido.
Governance has also been streamlined. Routine operational updates, which previously required DAO-wide votes, can now be handled by operators and the Curated Module Committee. The DAO still maintains control over key decisions, including operator selection and protocol parameters, with the ability to override or veto changes when necessary.
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