Lido Proposal: #0xf7b718e7807f763ba826735781145dd06b79b0228b37b74a22dd5ac252e03c40

Community Staking Module v2. Architecture and Fee Structure

Status:
Closed
For100%

For: 100%

50,917,464 LDO

Against: 0%

2 LDO

Voting Period

  -  

Proposer

0xDbBC6A93ae517D3ea568C04219cbBBd025f01CB6

Description

This proposal outlines the architecture description and staking rewards allocation (fee structure) for the proposed major upgrade of the Lido Community Staking Module called CSM v2.

Motivation

The current version of CSM has been immensely successful in pushing the decentralization of Lido on Ethereum. It allows Node Operators to join the Lido on Ethereum protocol permissionlessly and receive Node Operator rewards without needing to put up the entire 32 ETH minimum of a validator. However, some limitations and challenges remain that need to be addressed to make CSM more robust, flexible, and competitive.

One of the main challenges is the need to support different types of Node Operators, such as permissionless operators, identified community stakers, professional Node Operators, etc to allow for an incentive separation between these groups. One of the main incentives that CSM offers to Node Operators is Node Operator rewards. Currently, CSM allocates 6% of the staking rewards (pro-rata based on the share of active validators operated by each Node Operator within the module) to Node Operators. These conditions make the CSM reward structure way above the current permissionless staking solutions in terms of the bond required to rewards ratio and should be adjusted to fit the market.

CSM v2 Architecture

CSM v2 is a major upgrade of the currently operational CSM v1 aimed at making CSM more robust, flexible, and user-friendly. A detailed description of CSM v2 architecture and features can be found in LIP-29 and the corresponding landscape document.

The main changes and new features of CSM v2 are:

CSM v2 Fee Structure

The introduction of the Node Operator types will allow CSM v2 to offer differentiated protocol interactions between Identified Community Stakers and other permissionless participants, and other possible types in the future as well if the DAO chooses to enable them.

To keep CSM competitive with the permissionless staking market and continue enfranchising community stakers' participation in Lido on Ethereum protocol, it is proposed to:

A detailed description and motivation for the proposed changes are reflected in the following post and discussion on the Lido Research Forum.

Next Steps

If the proposed changes are supported by the Lido DAO: