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Lido Goes Modular With Vault-Based 'V3' Upgrade
Lido V3 introduces stVaults, a customizable staking system designed for institutions and more complex investment strategies.
Feb 11, 2025, 3:00 p.m.
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What to know:
- Under Lido's newly proposed 'V3' upgrade, the largest staking service on Ethereum would be rebuilt around modular staking "vaults."
- Users could soon be able to stake into "stVaults," which will be customizable for institutions and more complex investment strategies, like restaking.
- If the Lido DAO approves the proposal, V3 could go live on Ethereum’s mainnet as early as the third quarter of 2025.
The developers behind Lido, the largest staking service on Ethereum, have proposed revamping the staking platform with modular "vaults."
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The new framework would introduce stVaults, a customizable component designed to help Lido accommodate institutions and more complex staking strategies.
Lido currently allows investors to pool their ether together and "stake" their crypto — locking up their tokens with the network, helping to secure it in exchange for interest.
Lido pioneered liquid staking: users get a receipt on their deposits called Lido staked ETH (stETH) that they can trade at any time. With liquid staking on Lido, entering and exiting staking positions became as simple as buying and selling stETH tokens.
Lido V3's stVaults are “modular smart contracts designed to meet the diverse and evolving needs of Ethereum participants,” according to a press release shared with CoinDesk. The upgrade would enable staking setups beyond cut-and-dry liquid staking.
Specifically, stVaults will be able to help institutional stakers who want to personalize their staking setups, node operators who want to attract high-volume stakers, and asset managers who want to create new staking use cases.
The move reflects the growing institutional interest in Ethereum staking as financial firms explore ways to integrate yield-generating crypto products into their portfolios. The stVaults are supposed to accommodate that interest by introducing modular building blocks that cater to different staking needs.
“What is important to understand with customizable infrastructure, is that you can in general build even more complex products,” said Konstantin Lomashuk, the founder of the Lido staking protocol.
The goal is "for Lido to be rebuilt as a foundation layer," said Lomashuk."It’s neutral infrastructure: everybody can use, stake their assets, utilize it, restake or leverage and have more liquidity.”
The developers vision for V3 is to evolve Lido into an "open staking marketplace,"user will be able to opt into whichever staking setup fits their objective and risk profile — a departure from Lido's catch-all approach to staking, where all users stake the same way, through the same interface, in exchange for the same interest rate.
The shift brings Lido further in line with other modular decentralized finance (DeFi) products, like Morpho and Symbiotic, which employ vault mechanisms for lending and restaking, respectively. The upgrade also makes Lido more useful for restaking — where ETH is "restaked" to secure other protocols in addition to Ethereum. “You can restake your stVault," explained Lomashuk. "Liquid restaking tokens can utilize this infrastructure to grow the APR."
Lido V3 was formally presented by a group of core developers to the Lido DAO, the decentralized autonomous organization that governs the protocol, on Tuesday. If the DAO approves the proposal, V3 could go live on Ethereum’s mainnet as early as the third quarter of 2025.
“Now it's a new phase,” Lomashuk told CoinDesk.
Read more: Lido Co-Founder Teases 'Second Foundation' for Ethereum Amid Community Backlash
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