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Lido V3 stVaults

Institutional-grade Ethereum Liquid Staking Token Solution

Liquid Staking Tokens (LSTs) on Ethereum

Liquid Staking Tokens (LSTs) are tokenized representations of staked ETH that allow holders to earn staking rewards while retaining liquidity. Unlike traditional staking, which locks up ETH and limits capital mobility, LSTs (such as stETH from Lido) enable users to use their staked assets across DeFi applications or for trading, all while continuously accruing rewards.

This innovation increases capital efficiency and unlocks new use cases for institutional portfolios, asset managers and especially ETF issuers alike.

With Switzerland’s strong regulatory environment and infrastructure providers like Solstice offering locally hosted solutions, LSTs can be integrated into compliant digital asset strategies, aligning yield generation with regulatory expectations and operational security. The latest Lido V3 upgrade introduces “stVaults,” a feature specifically designed for institutional adoption, offering enhanced control, modular compliance options, and options for improved slashing protections, making institutional participation in liquid staking more secure and regulator-friendly than ever before.

Key Benefits:

  • Liquidity: Users can trade or use stETH without unstaking

  • Composability: Integrates with DeFi for additional yield strategies

  • Reward Accrual: Automatically tracks staking returns

Introduction to Lido

Lido is the leading liquid staking protocol on Ethereum, enabling users to stake ETH while maintaining on-chain liquidity through a derivative token called stETH. When users stake ETH via Lido, they receive stETH in return, which represents their staked position and accrues staking rewards over time. This allows users to retain full economic exposure to staking returns without locking up their capital, a key innovation for both retail and institutional participants.

Lido operates as a decentralized protocol, governed by the Lido DAO, and partners with a diverse set of professional validators to secure the Ethereum network. With billions of dollars in total value locked (TVL), it has become a foundational component of the Ethereum staking ecosystem.

From a compliance and risk management perspective, Lido distinguishes itself by:

  • Distributing stake across vetted node operators, such as Solstice

  • Supporting non-custodial staking, where users retain ownership of their assets

  • Introducing slashing insurance mechanisms to mitigate validator risk

  • Providing transparent governance and auditing, with open-source smart contracts

With the recent launch of Lido V3, the protocol has taken a major step toward institutional readiness, introducing “stVaults”, a modular staking framework designed to meet the operational, legal, and compliance needs of regulated entities. This allows institutions to participate in Ethereum staking with greater control, infrastructure flexibility, and regulatory alignment.

Lido V3 stVaults

The new Lido V3 stVaults are enabling dedicated and segregated pools per client with additional customizations.

  • Solstice is an early adopter partner of Lido to bring Lido Vault and Liquid Staking to the next institutional level.

  • Asset staking can be initiated from the multiple custody solutions.

  • Lido Vaults is enabling dedicated and segregated staking pools per institutional client.

  • Funds are not commingled and are traceable at every given time.

  • The stETH out of a Lido Vault are virgin and completely fungible with other stETH.

  • Vaults can configure the staking operators ranging from dedicated operator sets, DVT Clusters and/or Web3 Signer solutions. Allowing local and jurisdictional sets for sovereign staking.

  • Enabling participants to swap, provide liquidity as well as wrap/unwrap stETH/wstETH.

Advantages for ETF issuer

Maximizing investor returns through capital efficiency is essential for an ETF issuer like larger Asset Manager. Reducing the amount of idle, unstaked ETH in the ETF product presents a clear opportunity to enhance capital utilization without compromising exposure or compliance.

Leveraging Lido V3’s stVaults, a purpose-built solution for institutions, offers a logical and efficient path forward. Solstice is proud to be an early implementation partner of Lido V3 and is currently rolling out the first stVaults with several major institutions, giving us the flexibility to extend highly competitive, institutional-grade fee structures to Asset Managers.

For ETF issuers, utilizing LST solutions such as Lido V3 enables them to increase the stake ratio in their products without holding a portion of ETH unstaked for redemptions. Using Lido V3 stVaults is the most risk-neutral approach, as Asset Managers can maintain a dedicated and segregated pool for staking ETH.

Solstice is currently implementing the first institutional-grade products based on Lido V3 stVaults. If you are interested in this new upcoming product line, please request an introductory call with us.

Further documentation

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