KEY TAKEAWAYS
- The Community Staking Module v2 expands Lido’s permissionless staking from 3% to 5%, with plans to reach 10% by 2025.
- CSM v2 introduces the Identified Community Stakers framework, enhancing participation and benefits for independent stakers.
- New features like Entry Gates and the Strikes system improve protocol security and decentralization.
The Community Staking Module (CSM), launched in October 2024, aims to simplify solo staking contributions to Ethereum’s security. Over the past year, demand for this module has exceeded supply. In response, the CSM v2 has been introduced to expand the permissionless staking portion of the Lido protocol core pool from 3% to 5%, with plans to increase it to 10% by late 2025 or early 2026.
Beyond increasing the permissionless staking limit, the CSM v2 introduces the Identified Community Stakers (ICS) framework. This novel approach ensures Community Stakers receive full benefits from the module, enhancing their participation in the network.
Key Features of CSM v2
The CSM v2 focuses on two primary goals: scaling the permissionless staking portion to 10% of the protocol stake and expanding meaningful participation for Community Stakers. This is achieved through four key new features.
Entry Gates: Entry Gates create tailored entry pathways for Node Operators, enabling operator-specific features such as unique reward shares or bond requirements. At launch, three Entry Gate contracts are included: Permissionless Operator, Identified Community Staker, and Legacy Early Adoption. Each contract corresponds to a Node Operator type with differentiated parameters.
Identified Community Stakers: Through the ICS Entry Gate, the CSM provides targeted incentives to increase independent staker participation. This approach enfranchises Community Stakers while reducing the likelihood of benefits being monopolized by large operators. The ICS designation offers enhanced parameters compared to permissionless operators, including specific requirements for 32-ETH validators.
Operators can apply for ICS via the CSM widget, requiring proofs across three categories: Experience, Engagement, and Humanity. More details can be found in the ICS blog post.
Enhancements to Protocol Security
The CSM v2 also integrates EIP-7002, which allows the protocol to initiate validator exits via the Execution Layer. This integration improves fault tolerance and reduces trust assumptions, enabling voluntary operator requests or forced ejections of underperforming validators.
Additionally, the Strikes system introduced in CSM v2 allows for the permissionless ejection of consistently underperforming validators. This feature protects protocol health and maintains overall validator performance and annual percentage rate (APR).
With the release of CSM v2, Community Stakers are positioned to play a larger role in the Lido protocol. This development enables the scaling of permissionless participation and further diversifies the Node Operator set, contributing to a more decentralized Ethereum network.
Why This Matters: Impact, Industry Trends & Expert Insights
Lido’s Community Staking Module v2 introduces significant changes to the Ethereum staking landscape by expanding permissionless staking and introducing new features like the Identified Community Stakers framework.
Recent developments in permissionless staking highlight significant advancements. The U.S. Securities and Exchange Commission (SEC) issued a statement in May 2025 clarifying that certain types of staking on proof-of-stake (PoS) blockchain networks may not be considered securities. This guidance applies to staking native crypto assets in public, permissionless PoS blockchains, where rewards are distributed based on network operations rather than managerial efforts. This aligns with Lido’s expansion of permissionless staking, which could further decentralize Ethereum’s network.
According to Coindesk, Lido’s efforts with CSM v2 are consistent with broader trends toward decentralization in Ethereum staking, as new entrants, restaking protocols, and institutional-grade operators diversify the validator landscape. This supports the significance of Lido’s initiative in enhancing decentralization and maintaining its relevance in a competitive staking ecosystem.
Explore More News:
Disclaimer: The views expressed in this article are those of the authors and do not necessarily reflect the official policy of CoinsHolder. Content, including that generated with the help of AI, is for informational purposes only and is not intended as legal, financial, or professional advice. Readers should do their research before taking any actions related to the company and carry full responsibility for their decisions.
