ETHIstanbul Conference 2025 | Shared Liquidity with Customizable ETH Staking | Max Mol Eliza, Lido

Transcript

[Music] Oh, thank you folks for coming. Um, it's like the last talk um with a huge day. So, really really appreciate appreciate appreciate all of you being here. Let's see how it works. Yeah, it works. It's my name is Max. I'm from Lido. Mona is my ex or Twitter handle, my handle in research forum. Basically, if you for some reason want to read some of my research, this is my picture. This is my name. I'm a contributor for lighter protocol in analytics workstream. And today I'm going to talk about lighter v3 uh which is like a huge upgrade for the protocol on the different ways. I would

be more specific on STS or customizable staking with SH liquidity. So um speaking about Lido V3 like first things first like do you guys heard about Lido at some point? Anybody? Anybody? Oh okay. Uh so this is my like brief history overview just again from my perspective in terms of like why uh we call it V3 and way why I think it's like uh V3 in terms of unlocking new incredible features within Lido. So I'll keep it really brief. Um Ethereum staking. Um Ethereum is a proof ofstake protocol to participate in consensus

reaching mechanism. You need to have 32 ease. You need to know how to operate a validator and you need to um wait um different amount of time depositing and withdrawing from the consensus layer. Um right now it's interesting like times when there is enter Q and exit Q and basically laid out B1 as a concept is like a really simple solution that kind of like not handles the problem because this is not a problems providing additional layer on the serum staking.

First it's bul so you can participate in any amount of this you want. Second, it's trustless. So basically, if you don't have the experience or uh like time to operate validators, you don't need to trust the party you're giving uh access to your validators because it's all on chain within the smart contracts utilizing the features of Ethereum like difference between the contract validator address and withdrawal address. And the third point which is crucial is liquidity. Basically to avoid um transactions in terms of transactions cost of time for depositing and withdrawing you can utilize STE which goes for staked E token for trading

locking in DeFi. Um basically do whatever you want. It's mint oneonone to E. It's rebasable. It's always represents one is staked within the chrome core protocol. So this is a really really simple scam. You have a staker who could put some ease to the protocol get some ste uh enjoy the utility and the east would be staked across different node operators uh within the trustless solution. This is lighter v1 basically something we've started to enhance the base feature of the base layer. Lighter v2 again from my personal vision is the expansion of this idea.

This like right side of what happens with Ethereum which is within the protocol needs to be flexible needs to be adjustable for the network for constant push for uh decentralization less risk involved to make riskreward profile of Steve staked Ethereum um I would say the best on the market from the developer view and that's introducing of staking router and different staking models which is basically a plugins could that could be developed by third parties that could be developed by indiv independent contributors that could plug into the lighter protocol and if the DAO decides on the distribution that this particular model is bringing

something good for the stakers then some of the stakes some of the like total is would flow to this protocol. We have incredible models uh developed uh after V v2. It was simple DVT which is implementing distributed validator technology uh within two different clients. It is community staking model which is like absolutely amazing. Do you any of you guys are running a validator with lighter within community staking folks? I that's amazing. So that's basically the way when any person permissionlessly could start validating participating in the protocol enhancing the centralization uh within uh lowest amount of risk for the stakers where the

bonding mechanism and that's basically not the whole picture but like the essence within this story of light v2 opening the right side on making the flexible solution in terms of how the protocol which is controlled by the dowo and by the stakers within the dual governance could control what happens with e staked and then what's would happen next we like again this is my personal personal opinion and that's not a surprise I do think that lido is best taking solution it's um very good in terms of effectiveness also like effectiveness is a really tight competition on the validating market like all of the validators uh in terms

of consensus layer efficiency um execution layer efficiency are like fighting for the best. It's decentralized with over 600 node operators across all of the globe within different models within different setups, clients, uh everything. And it's governed by the DAO and with dual governance by STS holders which means that basically if you as a staker don't like where the protocol is moving and don't agree with the decisions made by the DAO we are onchain with the like transparent process you can vote for vote for block it and um exit the protocol before any uments will happen.

The second the liquid part. So avoiding the necessary to deposit and withdraw changing and like introducing volatility on total Ethereum staked securing the network. The stuff is incredibly liquid. It's like over 100 million of trading volume over 75 million of liquidity depths with like uh it's the most liquid liquid stake token on the market. And the third point which is leading our to like why we are concerning with tree why we are thinking about this why we was designing this is pretty simple it's me who think that lido is the best staking

solution it's it's like the best staking solution for me maybe for some of you maybe for some another people we have a pretty impressive TVL so it might appeal to like majority of actors but at the core side the actors are different. So one staking solution no matter how uh perfect or good it could be couldn't fit all of the needs. People may want different things and that's good. Uh but liquidity on the other hand is like a common good. You can create a fracture system of stake tokens which could work within the market but you would lose like incredible amount of value over the

network because of the all of the transactions costs between different tokens. So we want to keep fungibility of staff uh unified liquidity pool but still provide an option for users and by users I mean stakers not operators builders on Ethereum to actively um push the fillings what they want to introduce to staking and that requires kind of measure shift in terms of how lighter works That opens the question could we separate staking position and liquidity because before that staking position it's how is

go to the validators go to the net operators and liquidity are tied together it's a one product and the answer is yes yeah because that's the reason I'm here this is what we called stalls um basically the simple solution we introduce additional smart contracts uh which is called est which could be built by anyone and like on the hint it's small lido a part of lido it's like forking it you can st in st walls then this is could be delegated to any amount of node operators uh whichever users stakers and n operators agree uh within still the trustless solution of the

contract and we can provide as an asset representing this staked Ethereum and this is like the idea of introducing shared liquidity to customizable staking solutions. So why do I think that it's a major move? Because that opens up the way for actors for builders on the network to construct their own primitives to construct their own products to construct basically their own vaults. Uh it's a matter of agreement between parties operating with the capital parties operating validators actors providing tech like Sars sidecars

or something like this to build on the trustless infrastructures of Lido and utilized uh staked ETH as a liquidity on demand and basically what it means for Lido it's mean moving from uh single staking solution which may or may not be the best solution in the market dependence on the taste to um platform that could that provide an option to build customizable solution for everyone still utilizing the same liquid token which got the network effect effect of being accepted by like most of the D5 protocols and like known on the Ethereum

and huge liquid liquidity on basically all of the major DAXes. So in terms of like my previous story what it brings to the table it brings like incredible feature of customization we don't we or like lighter as a interface don't have only one product ST is right now it's a factory that could create a magnitude of pro of products and it's a community that we are empowering to build this products um like a little touchup on like how this going to work because again it's a major shift on how staff um is like backed right now. So like the upper side

is scorpool basically lido v v2 all the stuff is backed by the different models created model simple dvity tsm model with the minting one to one and that's the thing that dao controls that's like the one and only parameter uh in terms of riskrewards that is within the entity of lido dao that's one of the ways to stake and there are like magnitude different ways ways to st to stake which is STS. Users could create could create them, users could modify them, users could um experiment with them and to provide the same liquidity stuff within the ST uh we need to add a

collateral. So the whole idea basically within ST worlds there is no possibility to mint STS one to one but there is no like requirement to do so because all of the users of ST wallets not operators and capital providers um operate within the trust trustless environment and control all of the ETH all of the rewards that they they're getting. The STE is only a way to borrow the liquidity to utilize it in in define in defy returning with the same rate of light core. So basically you borrow 100 STE it's rebasing growing and you need to return the same amount. So the

collateral is the way that protects like the base layer the unified good of STS from any shocks that could happen within the ST walls. If festivals are growing faster than the SDS, that's that's great. That's the like win the rewards of users who buil who build them. If they are growing slower and they have a huge amount of borrowed STE, then they would have like reducing the amount of mintable staff. So this brings together shared liquidity and is a listed risk position. Depending on the actors um communicating with each other and building on the Ethereum, they could

take a little bit more risks. They could take a little less risk. They could just create the staking setup that they prefer. Introduce some APMs or have like a legal agreement with another operators if they want to. It's up to users to decide how they want to stake. they could even not stake but they still could utilized the shared liquidity of SD token. So speaking a little bit about the thing called called C corpool which is Slido V2 it's still here and it's like a major part of why this system is possible.

It's a base layer that provides a base index for staking rewards within the system which like operates completely the same and which operates as a market maker on the borrow market for the STE because we could on or not even we like anybody could could create STLs and just introduce the borrow borrow market between different staked like LST tokens that could be done. The problem with this you can create markets you can do this like any time but for market to fully operate you need activity on this market you need liquidity you need market makers and the core pool could act as a market maker here so you don't

need to find another actors to lend your STE uh if you are willing to provide your liquid stake token as a collateral the core pool could do could do this onchain within the provide risk framework within the govern the DA govern process and that opens up like the the ability to build a magnitude of different products. Um just to name a few, it all depends again on the tastes. It could be the products that may appeal to some institutions. when you want to stake, you want to stake on your terms and maybe you want to have some liquidity but you don't want to have

100% liquidity which you get for example if you participate in light core and stake right now you need 10% 15% 20%. You could be this build this with the ability to mint STS on demand and then swap it on the market with like the deepest liquidity. You can implement some strategies again within lighter core you stake you get SDS then you can do something with it lock it in D5 protocols within the walls you can do this automatically on the smart contract level and you as a builder can create the strategies you can go like with a higher risk profile you can go with the leveraged or looping conditions like with different borrow market aoro uh

anything like this you can create a vault uh put some ETH there. Mint ste on demand. Borrow some ETH on on any of this market again automatically. We as a smart contract and then put more E is in your wa mean some stiff and continue this loop again with risks and rewards being completely isolated to the users that actively participating within STS. We are purposibly abstracting light uh here because we are empowering users to express their feelings, express what they want, build what they want and and still utilized the liquidity of staked e token. So like the main two

points to take away from this talk which is like a title of this slide is simple. We Lido uh is empowering users to create their own staking setups because they should be different. They can be the one the best for all. But still within this like magnitude of staking set setups all of these actors could utilize the best liquidity on the staking market within SC token. And the last one if you're interested thank you for hearing me rumbling. Go there and join the test net create the

presentation. It's free. Thank you folks. questions. Yeah. Oh no liquidations. So we are currently running three cluster on DVT and other clusters as well and we have white table nodes as well and from this V2 perspective what is the cost because we have like 10% I think collateral or is that the cost of the whole service or are there any other services at the protocol level like for the vaults and other things as well? So if you're participating right now, we are still in a light of V2 phase. We

like you are on the right side of this uh model when you or on this picture on like the upper graph of the when the DAO trust you to operate the E. So it's not like a custom solution. It's delegated to DVT clusters within are you in simple DV or in CSM? in simple and a >> fantastic. So you are like actively participating in providing the vision of decentralization that DAO enforce with its taking staking policy and like each deposited on your validator is backed by is backing Steve minted one oneonone.

The walts is a solution for you as a node operator to bring your own client. For example, like if you have a client who have x amount of ease and you want and you're willing to provide your service as a node operator for them, you can build it on ST Walts creating a trustless infrastructure and give your client an ability to mint STE with up to not with one-on-one but up to like 95% or or 90% of provide ratio and this is borrowed liquidity.

they could utilize on the market. It doesn't affect the rewards that you are sharing because the rewards you're doing on your E is deposited is only for you to decide how to split. It's again a borrow market on top of this. >> Okay. We have full control. It's just 9 uh 1 to 95 because you also have to like some security for the general. >> Yeah. Yeah. We need to have like like if we would allow minting one to one you have full control then you slash your validators and your client like you put up 100 E your client mint 100 STE you slash your validators now your like cluster have 95 95 E and the client have 100 STE which is a funible token in this

case you can just wind down all of this run away with 100 STE and get plus five E like as a reward that's like a trade-off between giving the opportunity to build your own staking solution as you want and still utilizing the the liquidity here. >> Yeah. And I think 5% is the already existing protocol level uh fee and it makes sense for the general security. different again like I'm trying to avoid it a little bit like even if let's say the mintable amount is only 5% of STES it doesn't affect at all the rewards you get because the rewards like the fees the protocol gets uh the fee of the

rewards the core pool is getting with the world all of the rewards are yours the how much STE you can mint doesn't affect how much can you make because all STES you would mint, you would need to return back. It's like you have zero sensitivity on STE uh like within you. It's a liquidity source. You borrow it and then you you return back the rewards are like still between you and the staker within the ST.

>> Hey. Yeah. So um I watched John to ask so if I stake my a for STE what's the frequency I get paid in Ethereum and also even if I stick the stake the FTE in the D5 protocol would I still receive Ethereum or not? Yeah. >> So like answering your first question if you stake ST then ST is a rebasable token basically what that mean grow every epoch and every day the oracle brings up the new distribution and your amount of STS grows a little bit on your wallet. If you lock your STS in one of the D5 protocols, it depends

how this protocol is work. If it's supporting rebasable tokens, the STS would be growing representing your rewards within this protocol. If not, there is different version which is called wrap st. You can wrap and wrap your stick whenever you want and it's not rebasible token but the token which grows in price compared to E. STS is always oneonone to E. It's just growing in your wallet. RASC is not growing. It's a fixed number. But the protocol is always willing to uh swap it for some E of for some STE which is growing uh with the rewards accumulating within the protocol.

>> Uh any other question? Do we have any question? >> Yeah. Thank you so much Max. It was amazing presentation. It's uh we are very happy to have you. Uh we will have uh closing in ne next door the other stage. Uh the the event is actually like officially ended and uh it's pleasure to have you all. Thank you so much guys. >> Thank you folks. Thank you for staying with me.