The Lido on Ethereum V2 upgrade

The Lido on Ethereum protocol team calls for signal approval of the design for the Lido V2 upgrade. The upgrade enables Withdrawals and introduces the Staking Router modular architecture for Node Operators set. The mainnet upgrade along with all the parameters would be proposed for the Lido DAO approval in the on-chain Aragon vote for the upgrade closer to the hardfork dates.

High-level upgrade plan

The onchain and offchain code is undergoing security audits & formal verification now (see details below). The high-level upgrade plan is:

1. Have Goerli testnet deployment to check how all components behave under different scenarios. Tentative dates are 7-31 March, and depend upon Goerli Shapella timing.
2. The mainnet upgrade timing depends upon two things happening: 1) Mainnet Shapella hard fork; 2) audits and formal verification process end & all problems are mitigated. By current estimations 2) should happen before 1), but Lido on Ethereum protocol team doesn't have full control over either of them.

As the timelines for mainnet upgrade would become clear, the plans would be shared on the Lido research forum.

Upgrade scope

The major features prepared for the upgrade are:

1. Withdrawals support
   1. In-protocol withdrawals FIFO request queue
   2. Revised protocol accounting
   3. Facilitating validator exits
   4. Rewards skimming
2. Staking Router
   1. Solid architecture and interfaces for upcoming modules
   2. Upgrade NodeOperatorRegistry resembling the curated operators set
   3. Levers for the NOM/DAO ops

The upgrade implements several other changes as well, the most notable being a significant rewrite of the Oracle smart contract & off-chain daemon software. That’s required to support the withdrawals functionality, and make an order of magnitude more Node Operators possible.

One of the notable design V2 decisions is the introduction of the "Bunker mode". Lido Analytics and Tooling teams collaborated to provide deep research & analysis of the conditions under which it should be switched on or lifted.

Security audits & checks

To ensure the security of such a big change in the on-chain and off-chain code, Lido V2 is getting a significant amount of security audits:

1. Sigma Prime auditing the updated dc4bc version designed for the 0x00->0x01 Withdrawal Credentials rotation ceremony.
2. ChainSecurity audited the Staking Router code. ChainSecurity’s work will be used to find out potential weaknesses of the new crucial protocol part before merging it into the final protocol upgrade code. The audit report is published on github.
3. Oxorio is conducting a cover to cover audit of the protocol with enabled Ethereum withdrawals code base in February-March.
4. Statemind is conducting a cover to cover audit of the protocol with an enabled Ethereum withdrawals code base in February-March.
5. HEXENS is conducting a cover to cover audit of the protocol with an enabled Ethereum withdrawals code base in February-March.
6. MixBytes() Camp security audit contest of the protocol smart contracts is taking place in February-March
7. Certora is the final contributor to the protocol upgrade security and is working on the full protocol audit and formal verification in February-March.

Testnet & mainnet deployments timeline

The Goerli testnet deployment for the protocol upgrade & test runs of different scenarios for the on-chain and off-chain tooling would be happening on 7—31 March. Note that the timing is dependent on both the Goerli hardfork timing & the running security assessments, so the dates are approximate at this time.

The mainnet protocol upgrade would be scheduled closer to the hardfork, as there are no exact dates yet. The goal is to have at least two finalized security audits, full testnet runs & have the protocol prepared & upgraded on the mainnet in days before the Shapella.

Signal your support

This Lido on Ethereum protocol upgrade makes the protocol feature-complete by allowing stETH to Ether withdrawals and opens a path for more experiments and collaboration with Staking Router architecture. The Lido Contributors teams working on it are asking DAO community to signal the support for the upgrade design.