Why is the Lido V2 upgrade important to the LSD track?

Source: @0xFinish

Compile: ChainCatcher

On May 11, the liquid staking protocol Lido released the V2 upgrade voting announcement, according to the schedule: Aragon voting will start at 20:00 on May 12, and the main voting stage will end at 20:00 on May 14. DeFi researcher Finish tweeted that the impact of the LidoV2 update will be huge, which is exciting news for all LSD users. What information do you need to know? What are the upcoming opportunities and changes in this? The original text is as follows:

This topic will cover: a review of Lido, some key metrics of Lido, what has been updated in V2, the potential impact, and how to get involved.

Before we get into Lido V2, let’s quickly review what Lido Finance is. Lido is a decentralized liquid staking platform on Ethereum that allows users to stake their $ETH and get stETH in return, which represents 1:1 staked ETH and can be used freely in Defi.

Lido is currently the largest liquid staking platform with a market share of 31.6%. This is why the V2 update is so important, as it has a huge impact on the ETH ecosystem.

Lido also has the fastest monthly validator growth of any platform. These numbers will grow even faster with the V2 update.

Now that we’re familiar with the Lido, let’s dive into the Lido V2. The upcoming upgrade aims to enhance the staking experience by introducing a Staking Router architecture and in-protocol stETH:ETH withdrawals. Staking Router Architecture This design helps to integrate new staking modules in the Lido protocol. This means improved and more efficient infrastructure for processing staking operations.

Everyone benefits from this, and stakers will have their assets distributed among different entities, which greatly improves decentralization and security. Other types of node operator DAOs, independent stakers, and small groups can now participate in Lido.

Even developers. Users will also be able to propose and implement modules using different combinations of node operators and with various competing features such as coverage options and fee structures, and apply to join the Staking Router’s module set.

In-protocol stETH: ETH withdrawals: This is a game-changing feature for our stakeholders in the Lido V2 upgrade that simplifies the withdrawal process, making it more user-friendly and efficient. Withdrawals using Lido are much faster, less than 1 day for those holding less than 1000 stETH. Whereas standard Ethereum withdrawals usually take 2-6 days. Below is a table with 3 possible withdrawal times:

In addition, huge amounts of funds are locked in the protocol, and security is very important. Lido has 7 different audits and testnets with 27 different validators, so funds must be safe.

According to Lido official news, V2 has undergone 9 independent audits, and problems were found in the audits, and all problems have been confirmed or fixed.

The V2 update will bring multiple benefits to users. With improved security and new staking router infrastructure, LSD will become even more secure and decentralized. Also, with fast withdrawals, small wallets (<1000 $ETH) can withdraw almost instantly, if you are a large wallet, you will have to wait longer, but still more flexible than direct staking.

The final on-chain vote for the Lido V2 upgrade will take place on May 12. If the vote is successful, the upgrade will go live on May 15th, bringing all these exciting new features and improvements to the Lido community.