The release of Ethereum 2.0 has been eagerly anticipated by many. Millions of ETH have been locked into the Beacon Chain, but this staked ETH remains locked until ETH 2.0 launches.
This is where Ethereum staking derivatives like Lido come in, allowing users to essentially "have their cake and eat it too."
Lido enables individuals to continue benefiting from DeFi while their tokens are locked—a liquid staking innovation that has surged in popularity recently.
Staked Ether in Lido maximizes staking rewards by issuing distributed tokens (stETH) pegged to deposited ETH holdings at a 1:1 ratio.
How Lido Staked Ether (stETH) Works
The process is relatively innovative:
- Users stake ETH tokens in Lido.
- They receive stETH tokens in return.
- These stETH tokens can be used to participate in DeFi within the Lido ecosystem.
The exact amount of ETH staked determines the amount of stETH received (1:1).
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Key Features:
- No minimum ETH stake required.
- ETH can only be unstaked once the Beacon Chain goes live.
- 10% fee on accumulated rewards, managed by the Lido DAO.
What Is Lido Staked Ether (stETH) Used For?
Lido’s liquid staking mimics Ethereum’s Beacon Chain but with added flexibility:
- Users deposit ETH and receive stETH (1:1).
- These stETH tokens can be used in DeFi applications for additional yield.
For example:
- John stakes 1 ETH and receives 1 stETH.
- He uses his stETH in Lido’s ecosystem to earn extra rewards while his original ETH remains staked.
Where to Buy Lido Staked Ether (stETH)
stETH cannot be purchased directly. The only way to obtain it is by staking ETH on Lido.
However, ETH can be bought on major exchanges like:
- Binance
- Coinbase
- KuCoin
After buying ETH, transfer it to a wallet like MetaMask to stake on Lido and receive stETH.
Key Metrics
- Total ETH staked in Lido: 3,226,160 ETH (~$9.82B at current ETH price).
- Market cap of stETH: Equal to the value of staked ETH.
Pros and Cons of Lido Staked Ether (stETH)
✅ Pros:
- Liquid staking rewards.
- No minimum deposit.
- Works with DeFi.
- User-friendly platform.
❌ Cons:
- Rewards fluctuate daily.
- Smart contract risks.
FAQs
1. Can I unstake my ETH from Lido anytime?
No, ETH can only be unstaked after the Beacon Chain goes live.
2. Is stETH pegged to ETH’s price?
Yes, stETH maintains a 1:1 value with ETH.
3. What fees does Lido charge?
A 10% fee on staking rewards, managed by the Lido DAO.
4. How do I earn rewards with stETH?
Use stETH in DeFi apps within Lido’s ecosystem.
5. What are the risks of staking with Lido?
Smart contract vulnerabilities and reward volatility.
Lido continues to dominate liquid staking, offering a seamless way to earn rewards while keeping assets liquid. Stake your ETH today and unlock the potential of stETH!