Lido Finance deployed stVaults with its V3 update on the Ethereum mainnet, transforming the protocol into a modular staking infrastructure. The change aims to give developers, Layer 2 networks, and institutional participants greater control over validator selection, fee configuration, and risk parameters.
Lido Finance launched stVaults on the Ethereum mainnet, addressing a range of operational and compliance demands. The company also announced that the model will help mobilize a significant portion of the idle ETH supply.
stVaults are non-custodial smart contracts that allow third parties to define custom staking configurations while leveraging Lido’s existing validator and liquidity layers. According to Lido, the design preserves the composability of stETH but allows participants to select node operators, set fees, and implement tailored risk controls without building their own staking stack.
Despite its public launch, stVaults were already in use. Linea uses them in Linea Yield Boost to stake a portion of the bridged ETH and redirect staking rewards to incentivize liquidity providers. Nansen also uses them for staking, combining stVaults with DeFi strategies on stETH.
Day 1 results for stVaults
Upon its launch, stVaults was well-received by professional validators such as P2P.org, Chorus One, Pier Two, and Sentora. These are deploying dedicated infrastructure behind stVaults while maintaining access to shared liquidity, which Lido presents as a way to meet institutional segregation and operational separation requirements.
Lido and early integrators use stVaults to help meet institutional, compliance, and custody workflows. Lido DAO has proposed a risk assessment framework to evaluate new vault configurations.
Lido documentation and community discussions acknowledge residual exposures: the newly deployed contract logic is less tested than legacy pools, validator misbehavior can produce slashing that affects a single vault, and adverse market events could strain the stETH peg despite shared liquidity buffers.
For markets, the combination of dedicated validator stacks with stETH’s shared liquidity could increase productive use of idle ETH and expand demand for stETH-denominated instruments—provided the protocol’s new contracts and risk framework withstand real-world pressure and maintain market confidence.
