Brought to you by:

Lido, the dominant liquid staking provider on Ethereum, has unveiled Lido v3, marking a new phase in Ethereum staking. It’s also finally an answer as to how Lido will handle the ether restaking narrative. The LIDO token has been ranging between ~$1.45 and $2.45 since December. Unlike many newer tokens, most of its supply is already circulating.

There is no alt season:

“Alt season,” the period by which mid- and low- market cap coins see parabolic price action, isn’t coming. Just “occasional dumb pockets of liquidity” from chronic gamblers, says Jordi Alexander. 

Many reasons have been offered for why alt season is muted this cycle. One of them includes the massive token unlocks from VC-backed tokens. About $3.1 billion in tokens are set to unlock in February, down from a historical high of $15 billion in January. Notable big unlocks in February include $389 million in SOL, $201 million in WLD and $188 million in SUI.

— Donovan Choy

Brought to you by:

SKALE, the gas-free invisible blockchain, is “Built Different” for mass adoption: high-throughput, scalable, and fair. As a network of interoperable EVM-compatible L1s, SKALE’s user experience focus has accelerated a strong ecosystem across gaming, AI, and more. Due to SKALE’s gas-free nature, blockchain can be integrated invisibly, creating accessible Web2-like experiences for users and developers.

SKALE has:

• Over 50M UAWs

• 9 Games on the Epic Games Store

• Saved Users over $9.5B on Gas Fees

Dive in to learn more.

Lido V3 evolves Ethereum staking infra

Lido, which holds about 27% of staked ether, is out with its v3 plans today. At the heart of this upgrade is stVaults — modular smart contracts designed to provide greater flexibility, boost institutional adoption and engender deeper DeFi integration.

Konstantin Lomashuk, a founding contributor to the protocol, calls stVaults “a flexible foundation for the next phase of staking [that] upholds the security and decentralization the Lido protocol is known for.”

Modular staking and restaking

stVaults introduce a modular staking framework with components that operate alongside the Lido Core Protocol. This allows for customized validator setups, adjustable fee structures and optimized risk-reward profiles — including restaking.

V3 is anticipated to grow institutional interest in Ethereum staking, as stVaults should provide the customizable infrastructure needed to support regulated staking products and new financial instruments like staking-enabled ETFs. Beyond institutions, the structure enables participation from independent validators, asset managers and DeFi builders.

For institutional stakers, stVaults aim to allow staking setups that align with compliance requirements, such as validator customization, controlled deposit and withdrawal processes and optimized fee structures.

With BYOV (Bring Your Own Validator), node operators can presumably offer bespoke staking products, attracting high-volume stakers and diversifying revenue streams.

Curators and asset managers leveraging stETH as collateral will be able to implement advanced staking strategies that integrate with the broader DeFi ecosystem.

Among “advanced” strategies are those that involve restaking. Without explicitly mentioning EigenLayer or Symbiotic by name, Lido references "emerging restaking trends" and "shared security.” The key differentiator is that stVaults introduce an opt-in model for shared security strategies. This allows participants to engage with restaking protocols while mitigating exposure to restaking risks for the Lido Core Protocol.

A separate vault token can have its own liquidity and DeFi integrations, a Lido spokesperson told Blockworks. “Mellow has done something similar, but the key difference here is that this variant can be directly linked to a specific node operator, which wasn’t possible before.” 

Institutional growth and decentralization

In parallel with Lido v3, the Lido Ecosystem BORG Foundation has been established following a proposal that passed overwhelmingly with broad support, including from Blockworks Research. The BORG Foundation enhances Lido’s ability to form institutional partnerships, ensure compliance and provide additional governance safeguards.

The foundation allows Lido DAO to directly appoint and remove directors, oversee multisig management and provide indemnification for contributors. By creating a structured legal entity, the BORG framework aligns with Lido v3’s focus on institutional grade staking infrastructure.

Lido maintains that stVaults will also contribute to Ethereum’s decentralization. Lido dominance has been a concern for the more strident decentralization advocates in the past. The Reserve Ratio (RR) mechanism ensures a portion of staked ETH remains bonded as collateral, enhancing security and preventing excessive rehypothecation. This model fosters a more decentralized validator network, ensuring Ethereum staking remains both robust and liquid, according to the proposal.

V3 maintains liquidity through stETH fungibility and in-protocol redemptions, making it easier for stakers to enter and exit positions without disrupting the broader market.

Rollout plan

Pending approval from the Lido DAO, the rollout of Lido v3 will proceed in three phases:

• Early adopter program: Select partners will build and test staking vaults, preparing for a smooth transition to full stVault functionality upon mainnet launch.

• Testnet: Rigorous testing and integrations with ecosystem partners will ensure security and stability.

• Mainnet: Activation of institutional staking setups, advanced staking strategies and opt-in shared security mechanisms.

With the combined advancements of Lido v3’s modular staking infrastructure and the Lido Ecosystem BORG Foundation, Lido is cementing its role as a foundational component of Ethereum staking.

 — Macauley Peterson

Here comes the UNI fee switch:

Unichain mainnet is live today. The most talked about fee switch in DeFi appears to be finally activating. Uniswap Foundation announced last week details on a revenue-sharing structure that would allocate 65% of net chain revenue to validators and stakers on the Unichain Validation Network (UVN).

Of the other 35% of chain revenue, 15% will be paid to Optimism as part of Unichain’s participation in the Optimism Collective, with the remaining 20% going to the Unichain sequencer operator (currently Uniswap Labs).

With that, the UNI token may finally be a productive token with cash flows. 

How much cash flow? Some rough napkin math: Uniswap today generates $1.51 billion in fees, based on Token Terminal data. Assuming a flat fee and 15% of all Uniswap volumes from Ethereum L1 migrating to Unichain L2, Unichain would generate $226.5 million in annualized fees, of which $147.2 million (65%) would accrue to validators and stakers.

UNI is currently trading at $9.81, up 4% on the week since the announcement.

— Donovan Choy