What is Lido Staked ETH? Lido Staked ETH (stETH) refers to Ethereum (ETH) staked on the Lido platform. Koindeks.com In this article, we answered the questions of what is Lido, what is Lido Staked ETH, and what is the use of stETH. Let’s examine together this project that makes it possible to stake tokens for Ethereum 2.0.
What is a lido?
Lido is a protocol where users earn daily staking rewards for ETH staking. Users who stake on this protocol can earn passive income as network validators. There is no minimum token cap to join a pool on Lido and users can leave at any time. Users who stake their assets on this protocol receive stETH as a pledge. This is a token that tracks the ETH price in a 1:1 ratio.
What is Lido Staked ETH (stETH)?
stETH is short for Lido Staked Ether. In short, it refers to ETH staked on the Ethereum network. However, users may not stake their ETH on the Ethereum network in stETH. Instead, it stakes ETH on Lido, a stake pool. In return they receive stETH tokens, each of which stands for one ETH. With stETH tokens, Lido serves as a commitment from a central bank. These tokens are for securing users who stake or lock their ETH.
The staking process is done within the Lido platform. This is given to users within Lido as a commitment in exchange for the ETH they stake. In other words, it is literally about a promissory note. So much so that the only difference in the middle is that the guarantor of stETH is Lido, which works with a smart contract system. Users who want to stake their ETH on Lido actually deposit their tokens into a smart contract. In return, they receive an equivalent amount of stETH. Lido Staked ETH price forever follows the value of the original ETH.
Ethereum Merge accomplished: is the stETH era over?
Lido has been popular amid Ethereum creators for most of 2021 and 2022. In September of 2022, the Ethereum network switched to the Proof-of-Stake mechanism with the Merge upgrade. Accordingly, users can now stake their ETH directly on Ethereum. In other words, the need for ETH staking pools such as Lido has decreased. However, users can still stake their ETH through the Lido pool. Behind this motivation are two problems in the Ethereum network.
Within the Ethereum network, users are required to lock a minimum of 32 ETH to stake ETH. This is a pretty big number considering the price of ETH. However, tokens staked on Ethereum cannot be redeemable for a very long period of time. Accordingly, the ecosystem offers its users 6 or 12 months for staking. Lido Staked ETH does not have both. Therefore, it still attracts users.