Wind Down Simple DVT Module Regular Clusters

TL;DR

This proposal seeks DAO approval to wind down the 72 regular clusters in the Simple DVT Module (SDVTM) ahead of the originally communicated up to 3-year module lifetime. If approved, operators from regular clusters will be offered several continuation paths into the Community Staking Module (CSM), including through the Identified Distributed Validator Technology Cluster (IDVTC) operator type.

Operators from regular clusters will also receive a one-time grant funded through the existing EGG request with no additional funding required, subject to eligibility criteria based on cluster operations support during the wind-down process and subsequent active validation via CSM. The grant framework is intended to recognize the early wind-down of SDVTM regular clusters, the significant operational effort contributed by participants over the past two years, and the transition effort for those continuing to participate in the Lido protocol via CSM.

Background

Since launch, SDVTM participants have played an important role in battle-testing and operationalizing DVT within the Lido protocol under an intentionally early-stage model that required flexibility and sustained operational commitment. SDVTM successfully demonstrated the viability of multi-operator validator clusters and contributed to the Lido protocol’s decentralization and resilience.

However, maintaining regular clusters has become more challenging in the long term. Under current staking conditions, participant economics have become increasingly difficult, pushing a meaningful portion of operators close to break-even relative to the time and capital committed. This has contributed to increasing operator churn within clusters, requiring recurring coordination, rotations, reshare ceremonies, and maintenance efforts to preserve operational continuity.

In addition, SDVTM is currently the lowest-margin staking module in the Lido protocol, with an effective module-level DAO fee rate of ~2.9% compared to an average DAO fee rate of over 6% across other staking modules. While this margin was acceptable under stronger staking market conditions at the time of the SDVTM launch, declining per-validator rewards, challenging ETH/USD conditions, and the increasing operational overhead have made the regular-cluster model less viable over time.

At the same time, CSM has evolved to provide dedicated participation paths for DVT operators, including permissionless multi-operator DVT clusters and IDVTC operator type. Compared to the standalone SDVTM regular-cluster model, CSM offers a more scalable participation model while preserving the ability to continue DVT participation within the Lido protocol.

The current market environment, the growing operational burden of maintaining regular clusters, and the availability of CSM-based DVT participation paths provide a basis for reassessing the originally communicated SDVTM regular-cluster expected lifetime of up to 3 years. The proposed transition path through CSM, together with the proposed grant framework, is intended to recognize the significant contributions made by SDVTM participants over the past two years while supporting continued DVT participation within a more scalable framework.

Proposal

Given the considerations described above, it is proposed to wind down the 72 regular SDVTM clusters, offer affected operators continuation paths through CSM, and establish a grant framework for eligible operators.

Wind-down schedule

The wind-down timeline would differ by DVT provider:

• SSV clusters would begin winding down immediately after the Snapshot vote ends on June 22, 2026 (subject to DAO approval). The process would continue as validators are processed through the exit queue, with the intended target of completing exits before the SSV runway expires on June 28, 2026.
• Obol clusters would begin winding down on July 1, 2026. The process would continue as validators are processed through the exit queue, with completion timing dependent on exit queue conditions.

CSM Participation Paths

Operators from regular SDVTM clusters who wish to continue participating as Lido Node Operators would be offered several continuation paths through CSM, depending on their operator profile and preferred setup.

1. Individual participation in CSM: Operators may continue as individual Node Operators in CSM using the default permissionless operator type.

2. Permissionless multi-operator DVT clusters in CSM: Operators may continue running DVT setups through the default permissionless CSM operator type by forming or joining multi-participant DVT clusters.

3. IDVTC participation for Home and Community Stakers: Home and Community Stakers coming from SDVTM will remain eligible to claim the Identified Community Stakers (ICS) Type, which enables participation through the IDVTC for those who wish to continue running distributed validators as part of a cluster.

4. IDVTC participation for Professional Node Operators: Professional Node Operators may participate in IDVTC clusters without receiving ICS status.

For operators opting into IDVTC participation, NOM contributors will help facilitate the initial matching of participants. After that, cluster formation, operations, and liabilities will remain self-directed by participants.

Notes:

• The parameters of IDVTC Node Operator type would remain as approved in the corresponding Snapshot vote, unless changed through future governance decisions.
• More details on ICS eligibility are available in the Community Stakers Identification Framework.

Grant Framework

The total grant amount will depend on the final number of eligible operators. The maximum expected amount is 65 stETH.

It is proposed that the grants described below be funded through the existing EGG request, with no additional funding required.

If this proposal is approved, the Rewards Share Committee, in coordination with the NOM workstream, would be responsible for assessing, at its full discretion, whether the applicable eligibility criteria are met for any given operator, and for allocating these funds for the purposes described in this grant framework.

Approval of this proposal would authorize disbursements to be executed by transferring funds from the Treasury to the Rewards Share Committee’s multisig via Easy Track and subsequently distributing them directly to recipients from that multisig.

Initial Grant for eligible regular-cluster operators

• Amount: 0.175 stETH
• Distribution timing: August 2026
• Eligibility criteria: a) the operator participates in a regular SDVTM cluster; b) the operator does not participate in a Super Cluster; c) the operator continues supporting cluster operations throughout the wind-down process, with NOM contributors assessing this based on cluster participation, responsiveness, and operational continuity during the wind-down period.

Continuation Grant for operators continuing participation in the Lido protocol via CSM

• Amount: 0.175 stETH
• Distribution timing: December 2026
• Eligibility criteria: a) the operator qualifies for the initial grant; b) the operator participates in CSM by the end of 2026, either individually or as part of a DVT cluster; c) the operator has at least three months of continuous active validation in CSM at the time of grant distribution.

Note on Super Clusters

This proposal applies only to the 72 regular SDVTM clusters and does not affect the 10 Super Clusters. Super Clusters would continue operating validators for the time being; however, their long-term status may be reassessed separately.

Super Clusters are not proposed as a continuation path for regular-cluster operators. They were designed for a different operational profile and are not intended to serve as a general continuation path for regular-cluster operators. Expanding Super Clusters by adding new participants would require changes to cluster composition and additional coordination, which would reintroduce the same operational overhead this proposal seeks to reduce.

Next steps

If the proposal is approved:

• NOM contributors will communicate the wind-down plan to affected operators, including the timeline, operator responsibilities during the wind-down period, available CSM continuation paths, and grant eligibility conditions.
• SSV clusters will begin winding down immediately after the Snapshot vote concludes on June 22, 2026. Obol clusters will begin winding down on July 1, 2026.
• NOM contributors will support operators choosing to continue through CSM, including by providing guidance on available participation paths and facilitating initial IDVTC matching where applicable.
• Grant eligibility will be assessed according to the approved criteria. Eligible operators will receive the initial grant in August 2026, and eligible operators continuing participation in CSM will receive the continuation grant in December 2026.