Squad Staking in CSM v2: More Nodes, Less Risk, Higher Yield

CSM v2 focuses on encouraging participation from independent community stakers and squad staking makes the module even more accessible. 

Lido’s Community Staking Module launched as the protocol’s first permissionless module on Ethereum. CSM was designed to onboard community stakers and improve Lido’s decentralization by lowering the financial barrier to stake. With over 300 operators collectively running almost 6,000 validators as of Q1 2025, CSM has been one of Lido’s biggest success stories. 

Now, Lido is rolling out a slew of improvements with the launch of CSM v2. Like the first CSM release, the updated module lets anyone get started on their staking journey with just 2.4 ETH for their first validator (and 1.3 ETH for additional validators) rather than the 32 ETH required to solo stake. But CSM v2 also introduces several upgrades, notably the rollout of Identified Community Stakers and other designated Node Operator Types. Depending on their categorization, operators receive different access rights and benefits in CSM v2. 

CSM v2 is designed to support and grow the number of node operators while furthering Ethereum’s decentralization and the new updates serve those goals. Of course, Obol DVs can be deployed in CSM v2, lowering the ETH requirement to 0.3 ETH per operator for Identified Community Stakers in a five-person squad. Squad staking in CSM v2 is the perfect route for new home stakers and experienced node operators alike. We explain why below. 

New Improvements in CSM v2

The CSM v2 upgrade introduces several significant features: 

• Identified Community Stakers (and other designated Node Operator Types)—CSM v2 introduces categories for individual operators, including “Identified Community Stakers.” This group receives priority queue access and economic benefits. Identified Community Stakers will receive a boosted reward share of 6% (a 2x improvement on solo staking). CSM v2 is offering these perks to encourage participation from more independent community stakers, which will in turn contribute to Ethereum’s decentralization.
  
• Entry Gates and Extensions—CSM v2 uses modular entry contracts to assign conditions to different Node Operator Types, unlocking unlimited curation. This update enables new features such as modified bonds and rewards subject to governance. 
  
• A strikes system and performance requirement—CSM v2 issues bad performance strikes based on an algorithm, meaning persistent bad performers can be trustlessly removed (ejections can be triggered because CSM v2 supports EIP-7002). The module’s oracle rates node operators by performance and uses a minimum threshold to determine how rewards are allocated. Node operators that meet the threshold get added to a rewards allocation pool and those below the threshold do not get included. Node operators need not worry about strikes with squad staking—your squad has your back even if your node temporarily goes offline.

Identified Community Stakers are designated based on a framework that aims to help independent stakers identify themselves. The framework uses a scoring system, rewarding stakers across three categories: 

• Proof-of-Experience
• Proof-of-Engagement
• Proof-of-Humanity

Participating in the Obol Techne Credential program is an example of one way to improve your “Proof-of-Experience” score (the highest score is awarded to Silver Techne holders). 

How and Why to Squad Stake With Obol in CSM v2

Obol DVs are the most secure and performant way to run a validator, optimizing fault tolerance and eliminating single points of failure. With squad staking, operational duties are shared between squad mates. This means the validator does not go offline if a single node goes down, reducing the risk of any strikes. 

Squad staking in CSM v2 with Obol allows community stakers to access the advantages of DVs while enjoying the module’s new improvements. The updated module offers two key benefits: 

• Lowest barrier to entry—Node operators can start validating Ethereum with 1.5 ETH in CSM v2 as an ICS. When squad staking, that bond is divided between everyone in your squad. So, if you are part of a group of five operators, you can begin validating on mainnet with as little as 0.3 ETH. 
  
• Highest yield—Identified Community Stakers can earn a boosted reward share of 6% (for the first 16 validators) and deposit priority access (for the first 10 validators). CSM v2 offers the highest yield in the industry for permissionless node operators. Additionally, Squad Stakers in CSM earn Obol tokens through a fully funded, long-term incentive program.

With the entry barrier for the module set at 1.5 ETH, squad staking is the most accessible way to stake on mainnet.

Squad staking lets incentive-aligned individuals team up to validate Ethereum and get rewarded for their work. Communities like Rancho Stake and Stakesaurus are prime examples of CSM squads in the wild. With CSM v2, the process of becoming an operator is now easier than ever. 

Lido CSM v2 is live with Obol Distributed Validators integrated now. Anyone interested in taking part with a squad can create a Distributed Validator Cluster in a few steps. Check out our docs for the full guide on how to get started. Lido also offers their own guide.