stETH and Liquid Staking Tokens
Tokens representing a staking position — you keep liquidity while staking.
Liquid staking tokens solve the fundamental problem of standard staking — locked liquidity. Instead of your ETH being frozen, you receive stETH which you can use in DeFi.
How it works (Lido example):
•Deposit ETH → Lido → receive stETH 1:1
•Lido distributes ETH in validator pool
•stETH automatically accumulates staking rewards (rebase)
•stETH can be used in DeFi (as collateral, in Curve pool)
•When you want ETH back: wait for withdrawal (since Shanghai upgrade — instantly available)
Main liquid staking tokens:
•stETH (Lido) — dominant, ~30% of all staked ETH
•rETH (Rocket Pool) — more decentralized, node operator
•cbETH (Coinbase) — centralized option
•wstETH — wrapped stETH (static value, no rebase)
stETH peg:
•stETH should be 1:1 with ETH
•June 2022 (Three Arrows capitulation) — stETH depeg to 0.93
•Panic selling → buying opportunity
•Post-Shapella: peg returned to 1.0
DeFi integration:
•Curve stETH pool — massive liquidity
•Aave — stETH as collateral for ETH loan
•Morpho, Euler — optimized stETH lending
Risks:
•Smart contract risk (Lido has huge TVL = target)
•Validator slashing risk
•Centralization — Lido controls ~30% of Ethereum stake