For the first time in Lido’s five-year history, its 34 professional node operators will be required to post locked ETH bonds. Previously, the system ran largely on reputation. The new bond requirement adds economic accountability and a penalty mechanism for weak operating performance, aligning Lido more closely with the broader DeFi trend of requiring skin in the game from service providers.
The transition carries a cost for stakers. During the migration period, Lido stakers can expect a modest drag on returns, with an estimated 0.28% annual reduction in staking rewards. The migration itself is constrained by Ethereum’s consolidation queue and could take at least 117 days under ideal conditions. Lido has indicated the broader migration will occur in phases and could continue into the first quarter of 2027.
The upgrade arrives at a time when Ethereum staking is at a record high. A total of 41.04 million ETH is locked in staking, representing 34% of the circulating supply. Yet the notional value of those deposits stands at around $77.7 billion, reflecting a 40% year-over-year decline. Annual validation rewards have fallen to 2.62%, down from 3.05%, while the issuance rate has risen from 0.757% to 0.842%. The exit queue has completely emptied, while over 2.5 million ETH is waiting to enter staking, translating into an activation delay of nearly 44 days.