On Monday, Lido launched its Community Staking Module on the Holesky test network, allowing new entities to become node operators without requiring permission from its DAO. This initiative aims to decentralize the liquid staking ecosystem by enabling solo stakers and other Ethereum node operators to participate in securing the network.
Lido introduced stETH in 2020, a rebasing token that represents a person’s staked ETH and rewards from helping secure the Ethereum blockchain. With a market cap of $33 billion, Lido is a leading DeFi protocol in terms of total value locked.
The Community Staking Module is a significant shift for Lido, as it previously had a curated and permissioned validator set. The new module allows for permissionless entry, making it easier for solo stakers and amateur operators to participate in staking.
This move towards decentralization comes in the wake of allegations by the U.S. Securities and Exchange Commission regarding the status of Lido’s liquid staking token, stETH, as an unregistered security. The SEC’s lawsuit against Consensys also implicated Lido in offering unregistered securities through its liquid staking program.
In response to these challenges, Lido’s Community Staking Module aims to make staking more accessible and inclusive while enhancing the protocol’s decentralization. This initiative could potentially address concerns raised by the SEC and strengthen Lido’s position in the DeFi space.
Overall, Lido’s Community Staking Module represents a significant step towards a more decentralized and inclusive liquid staking ecosystem, offering new opportunities for solo stakers and node operators to participate in securing the Ethereum network.