Lido, one of the most influential liquid staking protocols in the Ethereum ecosystem, has unveiled Lido V2—its most significant upgrade to date. This next-generation evolution introduces two groundbreaking features: native ETH unstaking and a modular architecture via the Staking Router, setting a new standard for decentralization, security, and user freedom in decentralized finance (DeFi).
These upgrades are not just technical improvements—they represent a pivotal shift toward a more open, resilient, and user-empowered staking infrastructure. As Ethereum continues to mature, Lido V2 ensures that liquid staking remains aligned with the core principles of decentralization and censorship resistance.
The Significance of Lido V2
At its core, Lido aims to provide a decentralized alternative to centralized staking services offered by exchanges. By simplifying the process of staking ETH while eliminating the technical and financial barriers of running individual nodes, Lido has become a cornerstone of Ethereum’s staking economy.
With over 4.8 million ETH staked by more than 100,000 unique addresses, Lido plays a critical role in securing the network. However, until now, users could not withdraw their staked ETH—a limitation soon to be lifted with Lido V2.
The release of Lido V2 coincides with Ethereum’s Shanghai/Capella hard fork, which enables withdrawals across the entire network. This milestone unlocks true liquidity for stakers, allowing them to stake and unstake ETH freely, completing the loop of a fully functional liquid staking economy.
Key Features of Lido V2
- ETH Unstaking (Withdrawals)
For the first time, stETH holders can redeem their tokens for ETH at a 1:1 ratio. This fulfills a long-standing demand in the DeFi community and enhances stETH's utility as a deeply composable asset across lending platforms, DEXs, and yield strategies. - Staking Router: A Modular Future
The introduction of the Staking Router transforms Lido from a single-operator registry into a modular, extensible protocol. It allows diverse node operators—including independent validators, DAOs, and DVT clusters—to participate through customizable modules, increasing decentralization and resilience.
Understanding the Staking Router
The Staking Router is a foundational upgrade that redefines how Lido manages its validator set. Instead of relying on a centralized NodeOperatorsRegistry controlled by the DAO, the new architecture enables multiple independent modules to contribute validators to the protocol.
Each module functions as a self-contained pool of node operators with unique characteristics:
- Manages its own operator registry
- Stores validator keys
- Distributes stake and rewards among participants
This modular design supports various types of operators—from individual stakers to distributed validator technology (DVT) collectives—while enabling seamless integration with Layer 2 solutions or off-chain key storage to reduce gas costs.
Benefits Across Stakeholders
- Stakers: Enjoy increased security through broader distribution of validators across independent entities, reducing single points of failure.
- Node Operators: Gain new pathways to join Lido through permissionless or semi-permissionless modules such as community or DVT-based pools.
- Developers: Can propose and deploy custom modules tailored to specific use cases, fostering innovation within the ecosystem.
The Staking Router effectively turns Lido into an aggregation layer for Ethereum validation, where different modules compete on performance, fees, and decentralization metrics—driving continuous improvement.
Future Module Types
As adoption grows, several specialized modules are expected to emerge:
- Community Module: Permissionless entry for individual stakers with reputation-based mechanisms to reduce collateral requirements.
- DVT Module: Supports distributed validation using technologies like Obol or SSV Networks, enhancing fault tolerance.
- L2 or Off-Chain Module: Reduces on-chain costs by storing validator keys off Ethereum mainnet.
Multiple instances of these modules can coexist, allowing for experimentation and optimization without compromising protocol stability.
👉 Explore how developers can build custom staking modules on top of Lido’s modular infrastructure.
Enabling ETH Withdrawals: Turbo vs. Bunker Mode
One of the most anticipated features in Lido V2 is the ability to unstake ETH from stETH. To ensure both speed and safety during withdrawals, Lido implements a dual-mode system: Turbo Mode and Bunker Mode.
Turbo Mode (Default)
In normal network conditions, Turbo Mode allows fast processing of withdrawal requests using available ETH from deposits and rewards. While actual validator exit times depend on Ethereum’s consensus layer timing, many withdrawals can be fulfilled within hours to days, without waiting for full validator exits.
Automated tooling helps node operators manage validator exits efficiently, minimizing delays and improving user experience.
Bunker Mode (Safety Fallback)
In extreme scenarios—such as network congestion or malicious activity—Bunker Mode activates to protect all stakers. It temporarily pauses withdrawals and socializes any negative impacts across the protocol, preventing sophisticated actors from exploiting timing advantages at the expense of ordinary users.
This dual-mode approach balances user experience, liquidity availability, and systemic risk mitigation, ensuring long-term sustainability.
How Withdrawals Work: Request & Claim Flow
Due to Ethereum’s asynchronous nature, withdrawals follow a two-step process:
- Request: Users lock their stETH to initiate a withdrawal.
- Claim: Once ETH is ready (after execution), users can claim it anytime.
During the request phase, users no longer earn staking rewards. Processing times vary:
- Best case: a few hours
- Typical: under one week
- Worst case: longer delays possible
This design ensures fairness and predictability across all participants.
Security-First Approach to Protocol Upgrades
Security is paramount in decentralized systems. Recognizing this, the Lido team subjected the V2 upgrade to one of the most rigorous audit processes in DeFi history—seven independent audits from leading firms:
- Sigma Prime: Auditing the 0x00 → 0x01 withdrawal credential rotation
- ChainSecurity: Early review of Staking Router logic
- Oxorio, Statemind, HEXENS: Comprehensive audits of withdrawal-enabling code
- MixBytes: Hosting a security audit competition
- Certora: Providing formal verification for full protocol integrity
All audit reports are publicly available in Lido’s GitHub repository, reflecting a strong commitment to transparency and trustlessness.
Additionally, Lido has adopted a formal Audit Committee policy to institutionalize ongoing security evaluations—a model other protocols may soon follow.
Roadmap and Deployment Timeline
While subject to change, the current rollout plan is as follows:
- Early February: Code freeze and start of security audits
- Late February: Snapshot vote signaling support for upgrade parameters
- Early March: Deployment on Goerli testnet; completion of chain and off-chain testing
March–April:
- Withdrawal credential rotation (0x00 → 0x01)
- Pre-hard fork protocol upgrade
- Mainnet contract deployment
- Final Aragon governance vote
- Activation following Shanghai/Capella hard fork
Post-upgrade, Lido DAO will open research forums for community collaboration on future module proposals, reinforcing its open-source ethos.
Frequently Asked Questions (FAQ)
Q: What does Lido V2 mean for stETH holders?
A: stETH holders gain full liquidity for the first time—able to redeem their tokens 1:1 for ETH. This significantly increases stETH’s utility in DeFi and removes previous exit limitations.
Q: How does the Staking Router improve decentralization?
A: By enabling diverse node operator types through modular design—such as DVT clusters and DAO-run validators—it reduces reliance on any single group, spreading control across more independent actors.
Q: Can I still earn rewards while waiting for my withdrawal?
A: No. Once you submit a withdrawal request, your staked ETH stops accruing rewards until the process completes.
Q: Is unstaking instant?
A: Not always. While funds may be available within hours in ideal conditions, most requests should clear within a week. Delays depend on network dynamics and validator queue lengths.
Q: Are there fees for unstaking?
A: Currently, there are no direct fees for withdrawals. However, gas costs apply when claiming ETH on-chain.
Q: How can developers contribute to Lido V2?
A: Developers can propose new modules for the Staking Router—subject to DAO approval—enabling innovations in node operation, security models, and cost efficiency.
Final Thoughts
Lido V2 marks a transformative moment in Ethereum’s evolution. With native unstaking and a modular architecture powered by the Staking Router, Lido strengthens its position as a leader in decentralized, secure, and accessible staking.
These upgrades fulfill the original promise of liquid staking: full control over assets without sacrificing usability or security. As Ethereum continues to scale and evolve, Lido V2 ensures that its users remain at the forefront of innovation—empowered, protected, and truly decentralized.