Lido, the leading Ethereum liquid staking platform, disclosed a proposal on Tuesday for an upgrade designed to help decentralize the project while establishing procedures for users to redeem staked ether following next month’s Shanghai upgrade.
The two proposals included in the upgrade will be put up for a vote to the Lido decentralized autonomous organization (DAO) community sometime this month, according to a draft blog post shared with CoinDesk.
The launch of Lido’s version (v)2 upgrade hews closely to the timeline for Ethereum’s Shanghai upgrade, which will enable staking withdrawals in the Ethereum ecosystem.
In the weeks leading up to Shanghai, the Lido community will participate in the snapshot vote, followed by testing on Ethereum’s Goerli testnet in March. The actual v2 upgrade will go live at the end of March or early April, according to the draft blog post.
What does Lido’s v2 upgrade include?
The staking router proposal aims to help diversify Lido’s validators.
According to the draft blog post, the staking router “is a controller contract that would allow Lido to evolve into an extensible protocol via a modular infrastructure.”
Eugene Pshenichnyy, a core contributor at Lido, told CoinDesk: “It's actually a piece of technology that would allow Lido to decentralize” its validators.
The withdrawal proposal will enable Lido users to unstake their stETH and, in return, receive ETH at a 1:1 ratio, according to the post.
The proposal sets up two “modes” for processing withdrawals on Lido once staked ETH withdrawals are enabled on Ethereum.
The default mode, known as “Turbo mode,” will process withdrawal requests quickly and uses all the available ETH collected from deposits and rewards.
In the event that there is high network activity or an unforeseen “catastrophic” event, the protocol will turn towards “Bunker mode.”
“Its purpose is to prevent sophisticated actors from gaining an unfair advantage against other stakers by delaying withdrawals in the whole protocol and socializing the negative impact,” according to the post.
Once the Lido community votes on these two proposals, developers will start a trial, and follow the timeline closely of Ethereum’s Shanghai upgrade so it occurs simultaneously.
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