[DIP-30] Incentivized Mainnet Exception for Lido CSM/SDVT Participants and Updated Terms for IMP

Proposals DIP (DAO Improvement)
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Abstract and Motivation

Following the recent Lido DAO vote to expand the scope of the Decentralized Validator Vault (DVV) by including Community Staking Module (hereinafter: “CSM”) validators into the framework, an exception for Lido CSM participants of the Incentivized Mainnet Program (hereinafter: “IMP”) shall be implemented.

IMP rewards accrued by CSM participants will be redirected to the same dedicated Merkle Distributor contract established in DIP-22, which facilitates the proposed allocation of 80% of incentives related to validators run via the Lido CSM to be directed to the “Decentralized Validators Vault” and 20% to the Node Operator participants utilizing SSV based DVT following the guidelines set within the Lido proposal.

The mechanics of the Simple DVT (hereinafter: ”SDVT”) exception outlined in DIP-22 will remain unchanged, but an additional grant is allocated to cover the network fees of the current set of SDVT clusters.

To comply with the evolving regulatory landscape, updated terms and conditions shall be published on https://ssv.network applying to the regular IMP and any 3rd party exception like the one proposed for Lido. Reward calculation will be subject to sanction list scanning and blacklisting of certain recipients, if any.

Proposal Particulars

  • Lido Exception
    • Mechanics and Effectiveness
    • Reward Distribution and Claiming
    • Grants and Administration
  • Updated Terms and Conditions

Lido CSM Exception

Mechanics and Effectiveness

Based on the above abstract and motivation, the following exceptions, modified mechanics, and implementations to integrate CSM with the IMP shall be made:

  1. Distribution Contract: The same distribution contract used for SDVT, as defined in DIP-22 and owned by the SSV DAO, shall be used to store SDVT and CSM-allocated IMP rewards (hereinafter: “Distribution Contract”)).
  2. Adjusted Calculation: The Incentivized Mainnet Administrator (hereinafter: “Administrator”) will facilitate the modification and configuration to the regular IMP calculation script to map the accrued rewards by CSM and redirect those rewards to the Distribution Contract. The configuration and adjustments to the scripts and calculations shall be made public and reported together with the regular IMP reporting by the Administrator.
  3. Lido DAO contributors, coordinating with contributors from the Mellow Protocol, as the responsible party for rewards allocation, will provide publicly the following:
    1. Publish a thread on the Lido Research forum explaining the methodology of points distribution from the Mellow vault, explaining the breakdown of how points are allocated to DVV users, SDVT and CSM Node operators.
    2. On a monthly basis, publish a follow-up post with the distribution data, which can then be used as input to the reward distribution facilitated by the Administrator. Contributors will do their utmost for data to be provided before the 3rd of the following month.
    3. Respond to any inquiries or disputes regarding the calculated monthly distribution data and ensure that all required data to prove the calculation is publicly available.
  4. Based on the monthly distribution data provided by Lido contributors, the Administrator will use this input as-is to calculate “points to $SSV” rewards rate using the adjusted IMP script for Lido exceptions, compute a corresponding merkle tree, and set the merkle root for the Distribution Contract accordingly. The SSV DAO and the Administrator will assume the correctness of the data provided by Lido contributors and will not make any modifications to the input data.

CSM program participants will start accruing adjusted IMP rewards on March 1, 2025. According to DIP-27, CSM and SDVT participants will stop accruing IMP rewards at the end of the regular IMP, which is currently set for December 2025, or when the SSV DAO passes a proposal to end the IMP or its exceptions. Unclaimed rewards allocated to the Distribution Contract will be returned to the DAO Treasury 90 days after the IMP program or when any exceptions or underlying programs have ended.

Reward Distribution and Claiming

CSM and SDVT rewards will be claimable monthly in the same manner as defined in the regular IMP. This is proposed under the assumption that Lido contributors are publishing the necessary information to calculate the rewards in time, according to the Mechanics section. If, for any reason, the calculation is delayed or unforeseen challenges arise, the Administrator should announce the delay during regular reporting and update the reward calculation on the next round.

Due to the permissionless nature of the distribution contract, everyone can claim rewards by interacting directly with the distribution contract. However, the SSV Community, through the help of the SSV grants program, is providing dedicated claim pages for regular IMP and Lido CSM/SDVT rewards. If, for whatever reason, all of the community-hosted claim pages become unavailable during the program’s lifetime, the SSV Foundation is tasked to take necessary action to bring them back up or find ways to self-host such claim pages, leveraging the funds proposed in the budget section of this proposal.

Grants and Administration

To plan and facilitate the changes needed to implement the exceptions in the calculation, including changing the calculation script, the DAO tasks the Administrator to find a suitable implementor and, therefore, offers a grant of up to $5’000 to the chosen implementor. The implementor can be a community member or team, a service provider, including SSV Labs, or the Administrator himself.

Furthermore, at least one of the community-provided claim pages shall be adjusted to allow the claiming of Lido CSM/SDVT program rewards in addition to regular IMP rewards. To this end, the Grants Committee is to support the current implementors and offer a micro-grant of up to $5’000 to each chosen implementor to implement or update a claim page in line with the abovementioned requirements.

It is further proposed to allocate another 930 SSV tokens from the SSV DAO’s grant budget to SDVT to secure the runway of the assumed 36 clusters running 80 validators and 5 clusters running 500 validators to allow for a runway of 12 months in total under current SSV network conditions. This grant will be issued under the terms and mechanics of the first and second Lido grants, and is on top of the remaining funds from the aforementioned grants, totaling ~5000 SSV spendable (per 18th of March) at the disposal of the Administrator. The top-up is needed due to changed market conditions and higher-than-expected SSV network fees. This marks the maximum funding for Lido SDVT, and there will be no additional top-up, even if network conditions might change again and clusters won’t reach a full 12-month runway.

All allocated grant budgets shall be seen as one and support the activities according to this proposal.

The proposal suggests delegating the continuous operation of the IMP, the SDVT, and the CSM exception to @EridianAlpha (discord: eridianalpha) in accordance with and under the terms and conditions defined in Incentivized Mainnet Program Proposal and its extension in [DIP-18].

Updated Terms and Conditions

To comply with common regulations, claiming rewards is subject to Sanction Screening. Screening for sanctions will primarily involve blacklisting against public sanction lists and used to blacklist any flagged sanctioned wallets. Flagged addresses will be removed from the distribution, and so will the allocated rewards. These conditions also apply to the regular IMP distribution. They will be effective in line with updated terms of service and privacy policies published on https://ssv.network.

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Support and Positive Impact

Ecosystem Collaboration and Decentralization Advancement
The proposal integrates Lido CSM into the IMP framework, deepening collaboration between SSV and Lido, and further advancing the decentralization of Ethereum validation. By supporting CSM nodes through DVT technology, it strengthens network resilience against risks, aligning with SSV’s vision of “permissionless infrastructure.”

Technical Feasibility Validated
Reusing the Merkle Distributor contract from DIP-22 and existing IMP claiming processes minimizes implementation risks. The additional grant for SDVT clusters (2770 SSV) addresses market-driven fee fluctuations, ensuring 12 months of runway for current clusters and avoiding network instability due to funding gaps.

Proactive Regulatory Compliance
The introduction of sanction screening mechanisms (e.g., blacklisting) and updated terms of service are necessary steps to navigate global regulations, mitigate legal risks, and establish a foundation for long-term compliant operations within the SSV ecosystem.

Conclusion

Overall support for DIP-30 is justified as it reinforces SSV role as a core DVT infrastructure and enhances ecosystem resilience through compliance upgrades. The proposal aligns with SSV network strategic goals while fostering trust and sustainability in decentralized validator networks.

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So if a CSM validator is currently running on SSV, the validator owner/manager is currently receiving 100% of the IM rewards. Under this proposal, will it reduce their rewards to just 20%, with the other 80% going to the Lido vault?

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Dear SSV Community,

We at DragonStake are excited to express our strong support for DIP-30. As active participants in both SSV mainnet and the Lido x SSV initiative, we recognize the immense synergies and potential of these two projects working together. Encouraging collaboration between SSV and Lido is a strategic step toward driving broader adoption of Distributed Validator Technology (DVT) in Ethereum.

Lido has established itself as a key player in the Ethereum ecosystem, and we believe SSV can provide the essential technological foundation to accelerate the growth of DVT. By fostering deeper integration, we can contribute to a more decentralized, secure, and resilient Ethereum staking infrastructure.

Additionally, we fully support the inclusion of Lido x SSV participants in the SSV Mainnet reward structure. Aligning incentives across both initiatives will encourage more validators to adopt DVT, ultimately strengthening the network and ensuring its long-term success.

We look forward to contributing to this initiative and seeing the positive impact it will have on Ethereum’s staking landscape.

Best regards,
Gufete
DragonStake

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CSM is Lido’s community staking module. Users can get the opportunity to run validators by adding collateral. If users choose to run these validators through SSV (because of the high availability of SSV or SSV IMP), users need to pay cluster fees for these validators. If this proposal changes the original 100% incentives belonging to users to 20%, this may reduce the motivation of CSM users to choose SSV to run validators.

But as the already passed Lido proposal: https://snapshot.box/#/s:lido-snapshot.eth/proposal/0xcfb3473f8b91f368cc90218823d490c2a75ef4849bd76e000941d46b263f129c said, the 20% incentive ratio design reduces the possibility of large-scale outsourcing of validator operations in the CSM module, avoids the dominance of delegated staking, and maintains network health.

After the Lido proposal and the DIP30 proposal, validators running through CSM may reduce the income of operators (operators run validators through SSV), but this income is additional.

DIP30 is an adaptation and update of the Lido proposal, which represents the efforts of the SSV community to actively promote DVT.

In summary, I think it is reasonable to support DIP30.

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Thank you for the proposal, and continued support of both the Lido Simple DVT and Community Staking Modules.

The additional token allocation to secure the runway of Simple DVT clusters for their first year as agreed upon in the prior grant requests is well timed, with the Cohort 1 clusters currently having ~ 30 days of runway (vs. their initial registration date in late June/early July 2024). This will continue to help support these clusters in their first year of activity, before taking over the responsibility of SSV network fees themselves.

The proposal for the CSM exception is important for aligning the various stakeholders of the Lido protocol. CSM Operators will receive 20% of SSV incentives (vs. 10% in Simple DVT) taking into account the bonding requirements of CSM (which is equivalent to just 7.5% of the required ETH for their first validator). Operators in CSM already participate with a best-in-class reward structure, as evidenced by excess demand by Node Operators in the module currently.

This balances the reward structure for other stakeholders, as the vast majority of required ETH for CSM Operator’s validators comes from the protocol, with the Mellow Decentralized Validator Vault as a conduit for DVT provider incentives.

I look forward to seeing the continued growth of SSV via the Lido protocol with addition scaling of validators in the Simple DVT Module, continued growth in the Community Staking Module, and optimistically, in the SSV Lido Module expected to go live for voting in the coming hours.

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As Ethernodes, we express our support for this proposal, as it plays a crucial role in expanding Distributed Validator Technology (DVT) adoption and integrating Lido’s Community Staking Module (CSM) within the existing Incentivized Mainnet Program (IMP).

On one hand, SSV is a key player in driving DVT adoption, and as such, the distribution of rewards must reflect the essential role of node operators in securing the network. Ensuring that node operators receive a fair portion of incentives from the IMP will not only encourage broader adoption but also strengthen the decentralized infrastructure. Therefore, I support the inclusion of node operator rewards as an explicit part of the IMP framework.

On the the other, given that Lido is the largest Ethereum staking entity, it is critical that it participates meaningfully in the SSV ecosystem. The volume generated through Lido’s staking protocol allocated in both CSM and SDVT has contributed -and will contribute even more- significantly to SSV’s validator operations, making it reasonable that a portion of SSV tokens received should be allocated accordingly. This ensures a sustainable integration of Lido’s CSM within the broader DVT landscape.

As one clarification that can be made in the propossal: is not entirely clear how the 80% of rewards allocated to the Decentralized Validator Vault (DVV) and the 20% reserved for node operators are utilized. Specifically, some of the Lido CSM volume will not come directly from DVV users, yet it still accrues rewards under the proposed allocation structure.

Will the full 80% of the SSV allocated to the distribution contract ultimately be distributed to DVV users, or will a portion be repurposed elsewhere?

Clearer details on this matter would help ensure that all stakeholders understand how these incentives are structured.

Letz go SSV!

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If implemented, I think this proposal should be effective as of the date the vote passes, or better yet the 1st of the month following passage.

As currently described, it looks like it is set to be retroactive to March 1, which seems like a bad idea, and unfair to people who are already participating.

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I’m really happy to see proposals like this that promote decentralization and improve the SSV incentivized mainnet program.

However, since my brother and I (AXBLOX) are participants in Lido’s Simple DVT, this puts me in a potential conflict of interest. Would it be best for me to abstain from voting on this proposal? If so, how can I ensure that I maintain my SSV DAO delegation status while remaining neutral?

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Updated the post above with the correct Grants numbers, as some funds were still left from the previous grants, so the actual demand is lower.

It is further proposed to allocate another 930 SSV tokens from the SSV DAO’s grant budget to SDVT to secure the runway of the assumed 36 clusters running 80 validators and 5 clusters running 500 validators to allow for a runway of 12 months in total under current SSV network conditions. This grant will be issued under the terms and mechanics of the first and second Lido grants and is on top of the remaining funds from the aforementioned grants, totaling ~5000 SSV spendable (per 18th of March) at the disposal of the Administrator.

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Thank you for that. Abstaining is an option that does count as a vote and helps maintain your delegate status. In fact, it also helps reach the quorum, while not voting at all doesn’t.

Personally, I don’t think this is a conflict of interest, but I appreciate your sensitivity on the matter. Thank you!

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Hello @GBeast. It is indeed meant to be active in March, and if it passes the vote, it will already be accounted for on the April run for the IMP, which is for March.

While I can’t say anything about the fairness with regard to Lido participants, what I can say is that this was delayed to March and was initially planned for January.

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This actually passed via a Lido DAO vote in October, so I don’t think the March 1st start date is a concern. Any rewards that CSM operators received before the current allocation is fully in-line with expectations - this vote actually passed before CSM Early Access launched.

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The Lido Snapshot vote here might be of some help for clarification.

20% of CSM IM rewards will go to the Node Operator (vs. the 7.5% of ETH they bond - and only 4% for every validator after the first) and the full remainder of the 80% will go to the DVV.

For Simple DVT, 10% goes to the Node Operators (based on the number of SDVT clusters they participate in, with the full 90% going to the DVV.

There is no other allocation of rewards to any other entity.

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Thanks for the clarification!

It makes sense and it’s actually a great addition to the DVV incentives.

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Reading this proposal from Lido together makes the whole thing very clear. I wholeheartedly support this proposal; such a design will greatly advance the CSM’s DVT Operator. In the long run, this is a very visionary decision that can cleverly utilize SSV IMP to organically cultivate the soil for DVT, ultimately giving rise to a solid and reliable ETH network.

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UPDATE: The marked section below has been updated to indicate that flagged addresses and their allocated rewards will be completely removed from the distribution rather than redistributing the rewards across the remaining participants, which is harder to compute and prone to error. We believe this is more straightforward and in the best interests of the program and its administration.

Updated Terms and Conditions

To comply with common regulations, claiming rewards is subject to Sanction Screening. Screening for sanctions will primarily involve blacklisting against public sanction lists and used to blacklist any flagged sanctioned wallets. Flagged addresses will be removed from the distribution, and so will the allocated rewards. These conditions also apply to the regular IMP distribution. They will be effective in line with updated terms of service and privacy policies published on https://ssv.network.

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Thank you @kimonsh for clarification on this. Think this is a step in the right direction. support the proposal.

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One thing to consider is the impact of SSV Network fees on the rewards. In particular, the validator owner needs to pay the network fee and liquidation fee when they upload the validator to the SSV Network. This fee needs to be subtracted from the CSM validator’s potential earnings, and may be prohibitive.

Currently the SSV Network fee is targeted to be 0.75% of the validator earnings, and eventually rise to be 1% of the validator earnings.

The Incentivized Mainnet targets rewarding the user with an extra 10% of validator earnings.

If we split the IM rewards 80/20, that means Lido will get an 8% boost and the CSM validator will get a 2% boost.

But if we then have to subtract the SSV network fees from the CSM Validator share, this means that the validator manager is now down to 1.25% or 1%. Less if you also include the liquidation collateral.

Is this going to be enough reward to encourage CSM participants to go to the trouble of moving their validators to SSV? Or is the additional time, effort, and expense not worth the payoff, so they just run the validators as solo stakers?

At the moment (ETH = $2000 or so) a validator costs $64,000, and earns about 3% which is $1920 per year.

A 1% increase in earnings is therefore $19.20 per year per validator they run on SSV.

I think we may need to offer a higher incentive to the CSM validator owner in order to get them to migrate onto the network.

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depends on the point of view i’d say. i do agree with you, though.

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