Lido has launched its Core 2026 protocol upgrade, bringing native 0x02 validator support to the staking platform. The upgrade is expected to reduce the total number of Ethereum validators from roughly 880,000 to about 628,000 — a 29% drop — by consolidating validators and cutting per-epoch attestation messages by a similar margin. The move is protocol-level and requires no action from stakers.
How the validator consolidation works
The upgrade introduces native 0x02 withdrawal credentials, which allow validators to be consolidated more efficiently. Through the Curated Module v2 (CMv2), over 265,000 existing validators can migrate from legacy 0x01 to 0x02 credentials. After consolidation, the share of ETH secured by compounding validators will rise from 32.06% to 52.21%. That means a larger portion of staked ETH will be actively compounding rewards, reducing the overall validator count and easing network load.
A new penalty framework for node operators
CMv2 also replaces the old reputation-based system with ETH-backed bonding and a formal penalty framework. Node operators now put up real capital as collateral, and penalties are enforced programmatically. Seven client teams have been onboarded as curated node operators under this new system, and they've already received 8,710 stETH — worth about $21 million — in cumulative rewards. The shift gives Lido more concrete recourse if an operator underperforms.
Phase 1 of CMv2 is live. Phase 2 is in development and will bring flexible stake distribution, custom operator fees, and a strike system. Routine administrative updates are now permissioned to operators and the Curated Module Committee, cutting governance overhead. Lido hasn't given a timeline for Phase 2 yet, but the groundwork is set.
