Chapter · Master Lido
stETH mechanics
stETH tracks the ETH you staked plus the rewards it earns. In the classic version your stETH balance rebases: the number in your wallet ticks up a little most days as rewards land. Because each stETH is backed by staked ETH, it should sit close to 1:1 with ETH. In calm markets it does. Under stress it can trade at a small discount, since redeeming for real ETH takes time.
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What you get asked
How does classic stETH pass staking rewards to you?
Rebasing means your balance grows on its own as rewards arrive. You do not have to claim anything: hold stETH and the number rises over time.
Because each stETH is backed by staked ETH, it should trade roughly ___ with ETH.
One stETH represents about one ETH of stake plus rewards, so the fair value hugs a 1:1 peg. Market stress can pull it slightly below, but the backing is one-for-one.
Why might stETH trade at a small discount to ETH during market stress?
In a panic, people who want ETH now sell stETH into the market rather than wait for the withdrawal queue. That impatience shows up as a small discount, not a broken peg.
Match each way to use stETH with what it gets you
Liquidity is the point of liquid staking: stETH works across DeFi. Just remember every extra use stacks another layer of smart-contract risk on top.
You hold 10 ETH of stETH at roughly a 3% annual staking reward. About how much ETH does that earn in a year? (enter ETH)
10 ETH times 3% equals 0.3 ETH per year, arriving gradually as your stETH balance rebases upward. Rates drift with network conditions, so treat 3% as a rough figure. 🐜
The rest of this chapter
Liquid staking explained: stETH, rewards, and the risks nobody mentions.