97% of Ethereum validators still use 0x01 withdrawal credentials, limiting rewards; Lido tests 0x02 compounding mode.

A recent analysis shows that 97% of active Ethereum validators still use the 0x01 withdrawal credential type, which caps rewards at 32 ETH and automatically sweeps excess balance out, preventing compounding. Only 2.1% use the newer 0x02 type, introduced with the Pectra upgrade, allowing rewards to compound up to 2,048 ETH. Lido has launched a testnet version of its staking module supporting 0x02, with a mainnet launch planned for October 2026, pending approval. Validators with 0x00 credentials remain locked, unable to withdraw rewards or capital. Users should check their validator's credential type, as switching to 0x02 involves fees, is irreversible, and changes payout behavior, potentially affecting income and tax treatment.