Lido Staked Ethereum (stETH) is a token that represents staked Ethereum in Lido, combining the value of the initial deposit and staking rewards. stETH tokens are minted upon deposit and burned when redeemed. ^[1]

Overview

Lido Platform

Lido is a platform that uses Ethereum to provide liquid staking services, backed by leading blockchain staking providers. It makes staked ETH liquid and allows participation with any amount of ETH.

Users who stake with Lido receive stETH tokens in a 1:1 ratio to their initial stake. stETH balances can be used like ETH to earn and lend rewards, and are updated daily to reflect ETH staking rewards. There are no lock-ups or minimum deposits when staking with Lido. Users receive real-time staking rewards and can use staked tokens to compound rewards across the DeFi ecosystem. ^[3]

stETH

stETH was launched in 2020 in anticipation of Ethereum Merge with its proof of stake consensus mechanism. It functions as a liquidity token, enabling users to deposit their ETH into a smart contract on the Lido blockchain and receive an equal amount of stETH to be traded, exchanged, borrowed against, or used for other liquidity purposes. ^[2]

Staked Eth in Lido allows users to put up any amount of ETH as a stake in exchange for an equal amount of stETH. stETH accrues staking rewards regardless of where it is acquired. ^[4]

stETH as the liquidity layer for Ethereum staking

There are two ways to mint stETH in Lido v3: Core Pool and stVaults. This section covers how they link up and how stETH stays backed across both. ^[5]

The Core Pool (formerly known as Lido v2) is the classic way to stake: you send ETH and get stETH back at a 1:1 ratio. The ETH you stake goes into the Staking Router, which spreads it across a set of Node Operators. Redemption works through an asynchronous withdrawal queue: first you request to exit, and once the request is processed, you can claim your ETH—also at a 1:1 basis.

stVaults extend the protocol’s capabilities by enabling users to choose node operators and stake on customizable, non-custodial terms—while preserving access to stETH liquidity. In effect, stVaults turn staking into a marketplace where users can select who to stake with and under what conditions.

Each stVault is operated by a specific node operator and comes with its own rules—like fee structure, reputation, or validator preferences (for example, non-censorship). A staker selects a vault, stakes ETH, and can unstake at any time. Optionally, they can mint stETH against their vault position, unlocking liquidity without exiting. This stETH can be used freely—whether in DeFi, for hedging, or to build leverage. To exit a vault where stETH was minted, the borrowed stETH (plus fees) must be repaid first. ^[5]

Mechanics

stETH token balances daily when the oracle reports changes in Eth2 deposits and changes in ETH rewards from users who stake via Lido. Users who hold stETH will not see a transaction sent to their wallet because the rewards are embodied through a balance rebase.

Rather, users see their stETH balance automatically change without an accompanying transaction taking place. Rebase only works across integrated DeFi platforms - Curve and Yearn. Providing stETH as liquidity across UniSwap, 1inch and SushiSwap may result in losing out on a portion of the daily staking rewards because these platforms are not designed for rebasable tokens. ETH deposited via Lido is split between node operators and sent to their respective validators. ^[4]

Reward Rate

Users who stake their ETH with Lido receive daily rewards in form of stETH balance rebases. These rebases affect all holders of stETH, regardless of whether their ETH has been deposited in the queue. ^[4]

Use Cases

Lido staked ether (stETH) has several use cases because it is designed to take the place of staked ether (ETH).

Lending

Lending platforms e.g. Aave enable users to wrap their stETH and other cryptocurrencies to use as loans. The lending value is determined by the wrapped token, which is based on the underlying value of the staked token.

Liquidity Pools

Users can pool stETH with ETH in a liquidity pool, allowing them to swap stETH for ETH when desired. This is known as a pool swap and essentially unstakes a user's ETH.

Yield Farming

Staking ETH or stETH can provide users with the opportunity to earn yields. Platforms such as Harvest offer token holders the chance to deposit stETH and double their yield earnings. ^[2]