Lido Staked Ether

1. What is stETH?

stETH is a type of cryptocurrency token that you receive when you stake Ether (ETH) through the Lido platform. It represents your staked ETH and accumulates staking rewards over time. Essentially, stETH is a liquid version of staked ETH, meaning you can put it to work in DeFi while still earning rewards from staking.

2. How does stETH work?

When you deposit ETH into Lido, new stETH tokens are created for you. These tokens reflect your staking rewards daily through a process called a "rebase," which happens at 12 PM UTC. Your stETH balance grows automatically with the staking rewards.

3. Why does the price of stETH deviate from ETH?

The price of stETH can be different from ETH due to market demand and liquidity. For example, on June 11, 2022, 1 stETH was worth 0.955 ETH because of market liquidity issues. At the time of writing, 1 stETH was 0.9995 ETH.

4. What are the uses of stETH?

You can use stETH like ETH in various decentralized finance (DeFi) activities. This includes earning staking rewards and participating in lending, borrowing, and providing liquidity to earn additional returns.

5. What is the rebase mechanism?

The rebase mechanism updates your stETH balance daily based on the staking rewards accrued. This happens automatically at 12 PM UTC.

6. How are stETH tokens minted and burned?

When you stake ETH with Lido, you receive an equal amount of stETH tokens. If you want to convert stETH back to ETH, the stETH tokens are burned, and the corresponding amount of ETH is given back to you.

7. What are the risks associated with stETH?

Using stETH involves several risks:

• Liquidity Risk: The value of stETH compared to ETH can change due to market conditions.
• Governance Risk: Changes in Lido's governing body could affect the staking process or stETH's value.

8. When was stETH launched?

stETH was launched in December 2020 after Ethereum transitioned to the Proof of Stake (PoS) consensus mechanism.