Introducing Lido V3: Ethereum Staking Infrastructure

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Overview

Lido V3 introduces stVaults, a modular innovation that adds flexibility to Lido on Ethereum by enabling customizable staking setups, allowing users to select Node Operators and validation infrastructure. Stakers can take advantage of stETH’s liquidity, security, and integrations by tailoring Ethereum staking strategies to meet their needs and optimize rewards based on priorities.

 

Institutional stakers can access stETH through fully tailored setups that help fulfil internal compliance requirements while providing the operational control they need. Node Operators can design personalized staking products for high-volume participants, offering features like validator customization and enhanced reward mechanisms. Asset Managers can develop future-proof structured products, leveraging stETH as premier collateral within the Ethereum ecosystem.

 

The Staking Landscape Shift

Since the launch of Lido and stETH in 2020, the staking market has evolved significantly, driven by new users, emerging use cases, and shifting challenges. Institutional demand for staking has grown, at times accompanied by stricter regulatory and compliance considerations. While many institutions already stake through Lido, others face internal constraints.

 

At the same time, sophisticated users seek greater flexibility in reward structures, while Ethereum—along with its vast ecosystem of protocols—continues to grapple with scalability and stake centralization. With a growing diversity of user needs, a one-size-fits-all approach no longer fully aligns with the market’s evolution. While Lido remains the leading choice for liquid ETH staking, the landscape demands more personalization.

 

The time has come to introduce a new layer of flexibility to the most trusted staking solution—one that unlocks tailored, customizable, and modular staking on Ethereum. This evolution ultimately transforms Lido from a liquid staking protocol into Ethereum Staking Infrastructure.

 

Lido V3: Ethereum Staking Infrastructure

Lido V3 expands on the capabilities of Lido Core, the Lido on Ethereum protocol as it currently stands, consisting of the Staking Router and its Modules, by introducing stVaults (“staking Vaults”), a staking primitive designed to deliver tailored solutions across diverse use cases.

 

 

stVaults enable access to stETH liquidity in personalised setups where validation, fee structures, risk-reward profiles, and other parameters can be configured to meet the needs of a wide variety of stakers.

 

While the design aims to be as universal as possible, certain segments have been specifically considered to validate this approach:

  • Institutional stakers should have the opportunity to access stETH liquidity while keeping funds within a dedicated perimeter of verified counterparties, helping to ensure compliance with regulatory and risk management requirements;
  • Node Operators should have direct access to institutional and high-volume stakers, diversifying revenue streams and directly affecting their TVL and Rewards; 
  • Curators and Asset Managers should be able to swiftly adapt to market dynamics, leveraging stETH’s universal collateral properties to develop innovative strategies, optimize capital efficiency, and integrate with emerging DeFi opportunities.

 

End of the day, all the parties should have long-term incentive alignment: a predictable, future-proof, and value-based source of rewards within the Ethereum ecosystem.

 

The Technical Foundation: stVaults

stVaults is a non-custodial staking platform that operates alongside the existing Lido Core Protocol. This enables anyone to securely stake ETH via Node Operators of their choosing. Thus, through the connection to Lido Core, stVaults can mint stETH backed by a personalized validation setup, accessing the deepest LST liquidity and integrations the market has to offer.

 

 

This design enables stVaults to support a broad range of product lines while leveraging and enhancing the security, decentralization, and liquidity advantages of the Lido Core Protocol.

 

To mitigate slashing risks, the Reserve Ratio (RR) concept is introduced. stVaults mint stETH against the amount of ETH provided, with minimum amount bonded as defined by the stVault’s RR. This ensures that stETH minted through stVaults remains reasonably overcollateralized.

 

Overcollateralization strengthens stETH’s economic security by increasing its resilience to possible slashing events and prolonged penalties. Additionally, it enables a dynamic adjustment between public Node Operators’ reputation and bond requirements at the protocol level, ensuring network stability and supporting advanced integrations.

 

Read more on stVaults’ architecture and design in the V3 tech docs.

 

Customizable Vaults for Every Need 

With flexible configuration options, stVaults enable diverse builders to customize staking setups, optimize rewards, and develop tailored product lines while benefiting from stETH’s security and liquidity.

 

Institutional Staking

Institutional staking sometimes requires greater flexibility and control. stVaults address these needs by allowing institutional users to create dedicated stVaults that connect to specific Node Operators, configure integrations, and manage deposit and withdrawal access.

 

As a non-custodial infrastructure, stVault ensures that full control over deposited ETH remains with the vault owner. stVaults can support both custodial and non-custodial setups, accommodating various operational requirements while providing access to stETH liquidity.

 

Leveraged Staking

For advanced stakers, stVaults provide the tools to implement leveraged staking strategies, aiming for higher staking rewards—either manually or through automated smart contracts.

 

Potential approaches include:

  • Primary market: Accessing ETH directly from the Lido Core Protocol.
  • Secondary market: Utilizing ETH available from DeFi lending platforms.

 

Restaking Exposure

While the broader Lido Core Protocol helps minimize restaking risks for all stETH holders, stVaults introduce an opt-in approach to shared security. This allows participants to explore customized strategies and engage with emerging restaking trends without imposing socialized risks on the broader ecosystem.

 

A Future-proof Foundation

stVaults serve as a modular foundation for builders and developers, enabling the creation of staking products and tools adapted to the current meta of the ecosystem. By leveraging stETH’s universal collateral properties, developers can integrate seamlessly with DeFi applications, opening up new possibilities in decentralized innovation.

 

How Lido V3 Strengthens Ethereum’s Decentralization

An emerging marketplace for open coordination and competition

Ethereum relies on a broad decentralized validator network so no single entity can capture the protocol or override social consensus. With the introduction of stVaults in Lido V3, this goal is furthered by offering a modular, customizable staking framework. Each stVault holds deposited ETH, allows minting of stETH for liquidity, and ensures enough ETH remains bonded while still being staked to maintain security. Every stVault can define flexible rules — covering fees, validator configurations, or additional validation sidecars — thus creating an open, decentralized marketplace pivoting from a one-size-fits-all pool principle while retaining the fungibility layer of liquidity represented with stETH.

 

Balancing liquidity, performance & security

stVaults come with mechanisms to balance capital efficiency, validator performance, and stake concentration. An ETH bond mitigates slashing risks, while optional dynamic fees, benchmarked against the Lido Core Protocol being linked to validator subsets within the Staking Router, help manage liquidity, assess performance, and support decentralization. This design encourages more validator setups, promoting healthy competition and spreading validation services across numerous operators.

 

Voluntary upgradability and sovereignty

An stVault lets its staker choose if and when to adopt Lido’s upgradeability. Minting stETH opts into the protocol’s evolving governance, while returning stETH reverts the vault to native staking under the staker’s upgrade objection control. This seamless on-off approach preserves sovereignty, reduces friction, and respects Ethereum’s openness and decentralization.

 

The Roadmap

Lido V3 is designed as a builder-focused product, enabling Node Operators, Curators, Asset Managers, LRTs, and other DeFi protocols to create optimal end-user solutions that leverage stETH liquidity. The strategy prioritizes efficiently delivering the necessary tools and building blocks, iterating alongside partners and the broader community.

 

The rollout is planned in three stages:

  • Stage 1: Early adopters can use the existing tech stack to build re-staked vaults and initiate a pre-deposit and early access program for stVaults. These initial vaults will transition to full stVault functionality upon Mainnet launch.
  • Stage 2: A testnet deployment for stVaults will begin, allowing rigorous testing and integration development with partners to prepare for mainnet readiness.
  • Stage 3: The Mainnet launch of stVaults will enable key use cases, including tailored institutional setups, leveraged staking, and shared security configurations.

 

Next Steps

Lido contributors invite community members and ecosystem participants to collaborate on the design of Lido V3 and stVaults.

 

A research forum discussion is open. Once the design is finalized, the proposal will go to a Snapshot vote. If approved by LDO holders, an on-chain vote will follow after testnet and audits are completed.

 

 

Disclaimer: Blockchain staking rewards are not guaranteed, vary and are dictated by the rules of the method for validating transactions, which are developed independently by the developers of each specific blockchain network, and are not subject to modification by any liquid staking protocol. Past performance is not a reliable indicator of future results, and that all users should do their own research and due diligence before using Lido protocol. Additionally, interacting with malicious or faulty smart contracts may result in partial or complete loss of funds.