Lido Announces Upcoming Upgrade, Introduces New Staking Router

Procedure for staking liquid assets With the introduction of the impending Lido v2 update, Lido is planning to provide staking reward withdrawals in addition to improving the architecture of the staking process.

The implementation of Lido's new Staking Router and the facilitation of withdrawals for Ether (ETH) stakers are going to be two of the most significant focus areas of the proposed update.

A modular architectural design is introduced by the Staking Router. This architecture enables the construction of on-ramps for additional node operators, such as solo stakers, decentralized autonomous organizations (DAOs), and distributed validator technology clusters. The latter refers to a technique that enables validator responsibilities to be distributed over a number of different nodes.

It is hoped that the modular architecture of the Staking Router would make it possible for Lido to evolve into an extendable protocol. Validator modules are going to be handled in the same manner as sets of validator pools, which are capable of performing the function of a supplier for the protocol. Modules will be responsible for managing an internal operator registry, storing validator keys, and distributing stakes and rewards among its operators.

Users who are interested in withdrawing ETH will be required to undergo a suggested request and claim procedure. Users will be required to lock their stETH before they can begin the withdrawal process after submitting a request. The user's ETH will be retrievable after the request has been fulfilled, the ETH will be locked, the locked stETH will be burned, and the request will be marked as claimable by the protocol.

A concise roadmap describes development phases from February to April 2023, during which time code will be tested on the Goerli Testnet. This will be followed by a withdrawal credential rotation ceremony and the upgrade itself.

The withdrawal credential rotation is required because of a discrepancy between Lido protocol validators that use BLS-based "0x00" signatures and those that use newer smart-contract based "0x01" signatures. BLS-based "0x00" signatures are the older method, while "0x01" signatures are based on smart contracts.

The credentials are going to be rotated by Lido, and they're going to do it via a DAO ceremony. During the ceremony, participants are going to sign a rotation message, and then that message is going to be broadcast to the consensus layer network.

Lido Finance is now leading the race as the biggest decentralized finance protocol, with over $8 billion of value pledged on its platform moving into 2023, as was previously reported. Ethereum's next Shanghai upgrade is expected to take place in Shanghai, China.