CSM: stakeShareLimit and keyRemovalCharge parameters adjustment

Description

In the light of active development and preparations for Community Staking Module (CSM) v2 it is proposed to adjust several parameters for the current version of CSM, namely: increase stakeShareLimit from 2% to 3% upon reaching certain conditions and reduce keyRemovalCharge from 0.05 ETH to 0.02 ETH.

1. Increase stakeShareLimit to 3%

CSM has reached its stake share limit of 2%. This means that new validators in CSM can be deposited to only if the total Lido protocol TVL increases or some of the current validators exit. This fact limits the future growth of the Lido on Ethereum Node Operator set. Currently, it is estimated that about 50 net-new Node Operators are in the CSM deposit queue.

Proposal: If the below-stated conditions are met, increase the CSM stake share limit (stakeShareLimit) from the current 2% to 3%.

To maintain consistency of the stake share limit parameters in the Staking Router, it is also proposed to set the priorityExitShareThreshold to 375 BP (3.75%) to maintain the existing ratio.

Conditions for further on-chain implementation:

Proceeding with a change to the CSM stake share limit should take into account stake distribution across other Lido on Ethereum modules:

• SimpleDVT module should have all of the depositable validators deposited to;
• Curated Node Operator Pier Two (id #36) should get at least a minimum viable number of active validators (1000) to support business continuity (after the key rotation, they are sitting at zero active keys following the Snapshot vote on Nov 2024).

But, if CSM v2 release is supported by the Lido DAO via a separate snapshot vote and ready before the conditions above are met, the CSM Stake Share Limit can be increased alongside the v2 on-chain release, regardless of whether those conditions have been fulfilled.

2. Reduce keyRemovalCharge to 0.02 ETH

The keyRemovalCharge is a safety parameter in CSM, initially set to 0.05 ETH, with the rationale detailed in the original post.

Since that time, Ethereum gas prices have significantly decreased — the 8-month average is ~11 Gwei. For conservative estimation, we use a higher value of 20 Gwei as the maximum expected gas price.

Following the same methodology used in the original calculation: Estimated gas cost for queue cleanup: 1,000,000 gas * 20 Gwei = 0.02 ETH

Proposal: reduce keyRemovalCharge from 0.05 ETH to 0.02 ETH to ensure the parameter remains aligned with current network conditions while maintaining its safety function and not adding unreasonable operational costs to CSM Node Operators.

Next Steps

If the proposed changes are supported by the Lido DAO:

• the CSM Stake Share Limit increase (alongside priorityExitShareThreshold) will be included either in the next available on-chain vote once the outlined conditions are met, or can be a part of the CSM v2 release if CSM v2 release is supported by the Lido DAO in a separate Snapshot vote and happens before those conditions are fulfilled;
• keyRemovalCharge parameter value will be changed in one of the next on-chain votes.