Will Shannon brings a wealth of expertise to his role as Head of Strategic Initiatives at Lido DAO. With a robust background in Institutional TMT Equity Sales and academic credentials in finance and accounting, Will has been a pivotal figure in the Lido ecosystem for over two years. His strategic oversight in the Node Operator Mechanisms (NOM) workstream focuses on enhancing the platform’s validator infrastructure through the innovative integration of Distributed Validator Technology (DVT). What’s more, DVT and its power for liquid staking protocols will be the topic of Will’s talk at ETHSofia!

The Simple DVT Module represents a significant advancement for Lido. Can you describe the strategic considerations and planning involved in coordinating its development and integration into the Lido ecosystem? What key milestones have you set for its implementation?

The Simple DVT Module was introduced to achieve two main goals: 1. Increase the number of Node Operators using the Lido protocol, and 2. Battle-test DVT on mainnet.

After the Lido DAO voted for the deployment of the SDVTM in February 2024, the first testnet with Obol was completed and led to the onboarding of 12 initial mainnet clusters with 64 net-new Node Operators. Since that time, clusters using SSV Network’s DVT implementation have also been onboarded across two cohorts, and in all, 198 net-new Node Operators have been onboarded to the protocol since launch. This number is expected to surpass 300 within 2024.

The Node Operator Mechanisms (NOM) workstream plays a critical role at Lido. How do you envision the evolution of NOM over the next few years, especially in terms of improving operator efficiency and network resilience?

While there are many open questions given potential changes to how Ethereum staking will evolve, there remains a clear focus on continuing to improve the resilience and decentralization of the Lido Node Operator set, which directly relates to overall Ethereum network resilience.

The focus of the workstream is to assist the DAO by being the main interface for both Node Operators using the protocol and potential Node Operators, as well as to help consider policies related to validator operations.

Traditionally, this effort was mostly focused on coordinating onboarding rounds of Node Operators within the Curated Module as well as assisting with the operations related to their interactions with the protocol. When Simple DVT was introduced, the scope expanded to also onboarding solo and community stakers and coordinating DVT clusters.

Later this year, the Community Staking Module (CSM) will be launched, which will for the first time allow anyone in the world to run validators via Lido completely permissionlessly. This is a major advancement and very much in line with the goals of the NOM Workstream.

New modules such as the CSM will decrease the need for manual coordination by allowing for Node Operators to onboard without any human interaction. Over time, I would expect to see additional mechanisms that also increase the amount of automation for Node Operators, such as modules that track variables such as performance to manage stake allocations.

The success of DVT relies on the participation of node operators. What economic incentives and models are in place to encourage their participation, and how do you ensure these incentives align with the long-term goals of Lido?

The economic side of DVT is one of the more challenging aspects, and also centers around one of my main reservations related to the discussions around reducing issuance of Ethereum staking rewards.

Currently, Node Operators in the Simple DVT Module receive a higher share of validator rewards compared to the ones in the Curated Module. Whereas a single Node Operator in the Curated Module receives their share of validator rewards, in the Simple DVT Module this share is split between all of the participants in a cluster (in Lido Simple DVT each cluster has 7 participants).

With the recently passed proposal to expand the Simple DVT Module, all clusters will run at least 80 validators, likely more than enough in terms of validator rewards to cover the cost of operations from a hardware and time spent perspective for solo stakers.

Community feedback is vital for the development of decentralized platforms. How does Lido DAO incorporate community input into the strategic planning and execution of initiatives?

All major initiatives are voted on in a transparent and public manner via the Lido DAO Research forums. Initiatives that go to voting have a minimum week discussion period, and all voting is done transparently via LDO.

Initiatives such as GOOSE (Guided Open Objective Setting Exercise) is as an annual exercise that allows anyone in the community to post a proposal to the forums for what the DAO and contributor workstreams should consider as their focus for the future, with voting then taking place via Snapshot. All changes to the protocol go through on-chain voting via Aragon allowing all LDO holders a say in the future of the protocol.  

As the Head of Strategic Initiatives, what is your long-term vision for Lido protocol, and how do current projects and innovations like the Simple DVT Module align with this vision?

From my personal perspective, the future of the protocol is centered around continuing the significant progress in terms of decentralization. Today, there are Node Operators running validators on almost all continents, utilizing a diverse mix of Execution and Consensus layer clients, and including a healthy mix of solo, community, and professional node operators (now at 235 total Node Operators).

Innovations such as the Simple DVT and Community Staking modules are making Ethereum staking accessible to first time Node Operators – a crucial component in terms of the Ethereum network’s ability to be censorship resistant and credibly neutral.

In the future I hope to see thousands of Node Operators using the protocol to run validators, promoting the decentralization of the network and providing the most decentralized and resilient staking protocol for users. 

What inspired you to join ETHSofia?

After meeting a few members of the Lido Staking Community from Bulgaria, it was clear to me that attending ETHSofia would be a great use of time. Everyone I've met from the Bulgarian ETH community has been incredibly knowledgeable about their domain, and after seeing the list of topics and speakers attending I knew it was an event not to miss! I'm very much looking forward to attending the conference in October.