Lido Community Conducting Snapshot of V2 Upgrade Design Approval

Lido, the biggest liquid staking platform on the Ethereum blockchain, has begun preliminary voting on a software overhaul that will also clear the way for staked token withdrawals.

On Tuesday, the protocol opened a snapshot vote on its version 2 (v2) upgrade, which includes a “Staking Router” said to ease onboarding of different validator subsets. The second element of the v2 upgrade will allow users to redeem Lido’s flagship stETH tokens for the underlying ether tokens once Ethereum’s Shanghai upgrade, more accurately known as “Shapella,” hits.

Lido had 5,669,612 ETH staked at press time, according to Nansen, giving stETH a market cap over $9.2 billion.

The snapshot vote gives the Lido community a chance to signal its support or opposition to the proposal before it goes to an on-chain vote, the final step to approving the mainnet upgrade. This stage of the process runs through March 7; at press time it is very close to unanimous support.

In an email to CoinDesk, Misha Putiatin, a representative from Statemind.io, a blockchain security firm conducting a cover-to-cover audit of Lido's entire codebase, wrote "Lido is a #1 [decentralized finance protocol] by [total value locked] and withdrawals are #1 event of the year close to EIP-4844 scaling update so the incentive to do this right is massive. All eyes, some of them quite malicious, are going to be on withdrawals this spring so we will perform at our peak."

The upgrade will bring a "significant rewrite" to Lido’s on-chain code and off-chain code, according to the vote’s forum discussion.

In addition to stETH to ETH withdrawals and a new modular architecture for staking, the upgrade will rewrite Lido’s oracle smart contract and off-chain software in order to process withdrawals.

The voting to approve these vast infrastructure changes began even before Lido’s chosen vetters finished their work. Lido lists seven auditors involved in checking the security of its v2 code, but only one, ChainSecurity, appears to have completed its audit. “The audit scope is huge, 7.5+K lines of code. It’s akin to reading a book where you must keep track of each character’s actions and the structure of each scene, all while keeping an eye out for any discrepancies or irregularities,” Putiatin said.

Lido leads the pack

The snapshot for v2’s design approval coincides with Lido surpassing 5.6 million ETH deposits, worth roughly $9.3 billion, according to a Dune dashboard created by Lido’s analytics team. Lido, the leader of the liquid staking sector, now commands 37.7% of all ether in Ethereum’s staking contract, per Etherscan.

Last week, Lido’s share of total weekly deposits in Ethereum’s staking contract was 71.6%, as tweeted by Lido’s official Twitter account, which included Tron founder Justin Sun staking 150,000 ETH, or $240.7 million, on Feb. 25 in three transactions (1, 2, 3). Monday, he performed the largest staking transaction, per Nansen, by staking 88,000 ETH worth about $141.5 million.

The liquid staking sector across blockchains has a total value locked of $14.03 billion, making it the second-biggest sector in the crypto space surpassing decentralized lending and borrowing, according to TVL aggregator DefiLlama. Lido, on just Ethereum and not other blockchains, controls more than 65% of crypto’s total liquid staking sector.

Lido’s LDO governance token has jumped 44% to $3.04 since the beginning of February, making LDO’s total market capitalization stand at almost $2.56 billion. Lido’s APR currently stands at 4.5% on Ethereum.