The new and improved Lido V2 — What’s the difference?

The new architecture allows Lido to work “like a marketplace of stake allocation,” the liquid staking protocol’s master of validators says

article-image

WindAwake/Shutterstock modified by Blockworks

share

Often compared to replacing an airplane engine while in flight, the overhaul of Ethereum’s consensus mechanism from proof-of-work to proof-of-stake — without downtime — was no small feat.

Alongside this fundamental shift in Ethereum’s network structure, the largest liquid staking protocol, Lido, has undergone its own set of improvements. 

Besides the ability to withdraw staked ETH thanks to the Shapella network upgrade, Lido V2 added functionality for a staking router mechanism.

“The staking router itself is kind of like an architectural decision about how the Lido protocol should work,” says Isidoros Passadis, Lido’s master of validators, speaking to Blockworks on the Bell Curve podcast (Spotify/Apple).

Earlier this year, Passadis tweeted plans for the mechanism, explaining it “is an architecture for the allocation of stake across plug and play modules that make pools of validators available for use.”

Passadis describes the protocol as a “space hub” that produces security “in a sustainable manner for the planet that it protects,” allocating resources “across docked modules.”

He hopes that many staking modules will be built by contributors, transforming Lido into a hub that connects third party plugins to the main set of Lido contracts. The new architecture allows Lido to work “like a marketplace of stake allocation,” says Passadis.

“Right now,” Passadis notes, “there’s only one module.” But in the future as more plugins are created, the staking router “will make allocation decisions for which modules the stake should go to” when a user deposits ETH.

The router will perform this task, Passadis says, in a very similar fashion to how Lido allocates stake between node operators within a module.

“Let’s say that there’s a new module that’s created tomorrow,” he says. “This module is running, using distributed validators and allows solo stakers to participate.” It would have “a total maximum allocation threshold,” which is configurable and manageable by the DAO.

If a module is created, beginning with zero percent of total Lido stake and a maximum threshold set to one percent, for example, “all of the new stake that gets added to Lido will flow to this new module until it reaches that one percent.”

Upon reaching the maximum threshold, the “curated operator registry” will act as a “bucket” that picks up any additional stake until the DAO either adds new modules or changes the existing module’s maximum threshold.

“This process will repeat as more modules are added” with different features and parameters, according to Passadis.

In Lido V2, Passadis says, “we create the staking router, which allows you to design your own vaults, and then these vaults can be attached to the lighter protocol, based on the DAO’s decision.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Figure, founded by former SoFi CEO Mike Cagney, has emerged as a leader in onchain RWAs, with ~$17.5B publicly tokenized. The platform’s ecosystem volume is growing ~40% YoY as it expands beyond HELOCs into student loans, DSCR loans, unsecured loans, bankruptcy claims, and more. Operationally, Figure cuts average loan production cost by ~93% and compresses median funding time from ~42 days to ~10, creating a durable speed-and-cost advantage.

article-image

Former White House crypto official Bo Hines is expected to be the CEO of the new project

article-image

In bonds, stablecoins and billionaires, a reminder of what makes crypto special

article-image

21Shares exec says CPI and PPI data supports a Fed rate cut, with market leaning toward a 25bps decrease

article-image

The Ethereum co-founder suggested LINEA holders would be eligible for other airdrops in cryptic tweet

article-image

The layer-2’s biggest release yet brings benefits — but a post-upgrade outage caused a chain reorg

article-image

Crypto is shifting into risk-on mode — pump.fun dominates meme activity, while Lido leans on treasury maneuvers