As the launch of the Shanghai upgrade approaches, the Ethereum staking-compatible platform is preparing to return deposited ETH to stakers. Earlier today, Lido Finance, one of the largest ethereum liquidity staking protocols, released details about its latest upgrade ahead of the ethereum Shanghai hard fork.
The upgrade includes two core features: improving the staking architecture and enabling ETH withdrawals. While basic functionality appears to be necessary for the protocol to function, it must pass its decentralized governance model in order to be approved.
As part of the upcoming Lido V2 upgrade, the protocol is looking to enable two major new features, the staking router and withdrawal of locked ETH to stakers. The latter is highly anticipated by users of the protocol.
Lido attracted attention when Ethereum transitioned from Proof-of-Work (PoW) consensus to Proof-of-Stake (PoS) consensus mechanism. This shift has resulted in massive changes to the Ethereum ecosystem, validation, and supply issuance. To become a validator on the Ethereum network, users must deposit or stake a total of 32 ETH; this number happens to be a large amount when converted to fiat currency. In other words, not all ETH holders can participate in the new validation model.
So people turned to Lido Finance, which allows users to contribute large amounts of ETH to become validators and get rewarded. Lido allows users to earn yield by depositing any amount of ETH into the protocol. In exchange, users receive stETH, which is proof of their staked ETH.
Users cannot withdraw their staked ETH to validate on the network. However, with the launch of the Shanghai hard fork imminent, Lido has decided to prepare and detail the exit process. According to the protocol, withdrawals can be performed in two modes: Turbo and Bunker. As the name suggests, turbo mode is a faster withdrawal process. In contrast, Bunker mode is not needed except in "catastrophic" situations, and it is a slower process of executing transactions.
Either way, both methods use a request and claim process, and users must lock their stETH to initiate withdrawals after a request. In exchange, the protocol will fulfill the request by preparing ETH for withdrawal and destroying stETH, thus setting the request to allow users to reclaim their ETH.
