Review: Lido

What you get asked

1. Where do Ethereum staking rewards actually come from?

   The network pays for its own security with freshly issued ETH and priority fees. No central payer, no guaranteed rate.

2. When you stake through Lido you deposit ETH and immediately receive ___ in return.

   stETH is the liquid receipt for your stake. It keeps earning rewards while staying usable in your wallet.

3. Why should stETH normally trade close to 1:1 with ETH?

   The backing is one-for-one, so fair value hugs the peg. Stress can push it to a small discount because redeeming for real ETH takes time.

4. What happened to stETH in June 2022?

   Forced sellers dumped stETH for immediate ETH during the Terra and Celsius crisis, and with withdrawals not yet live the price slipped. The peg recovered later.

5. Match each Lido concept to its correct description

   These four ideas are the backbone of the chapter: how rewards land, how losses spread, how you exit, and the systemic worry about size.

6. You hold 20 ETH of stETH at roughly a 3% annual reward. About how much ETH does that earn in a year? (enter ETH)

   20 ETH times 3% equals 0.6 ETH per year, arriving gradually as your balance rebases. Rates drift with network conditions, so 3% is only a rough guide. 🐜

The rest of this chapter

Liquid staking explained: stETH, rewards, and the risks nobody mentions.

• What staking is
• What Lido does
• stETH mechanics
• The real risks
• Staking step by step