stETH: What It Is, How It Works, and Why It Matters in Crypto

When you stake Ethereum, you help secure the network and earn rewards—but your ETH gets locked up. That’s where stETH, a liquid staking token issued by Lido Finance that represents staked ETH and accrues rewards over time. Also known as staked ETH, it lets you keep using your staked assets in DeFi while still earning staking yields. Unlike locking ETH directly on the Ethereum beacon chain, stETH gives you liquidity. You can trade it, lend it, or use it as collateral—all while your underlying ETH keeps earning rewards.

stETH is tied directly to Lido Finance, the most widely used decentralized staking protocol on Ethereum, managing over $15 billion in staked ETH as of 2025. Also known as Lido, it allows users to stake any amount of ETH without running their own validator node. This makes staking accessible to everyone, not just big players with 32 ETH. Behind the scenes, Lido aggregates small stakes into full validator units, distributes rewards daily, and mints stETH 1:1 with staked ETH. The token’s value grows over time as rewards accumulate, even though its price stays pegged to ETH.

stETH is a core part of the liquid staking, a system that unlocks capital tied up in staking by creating tradable tokens backed by staked assets. Also known as liquid staking derivatives, this innovation solves the biggest problem in Ethereum staking: illiquidity. Before stETH, if you wanted to stake ETH, you gave up access to it for months or years. Now, you can use stETH in Uniswap, Aave, or Curve to earn even more yield. It’s used by traders, yield farmers, and institutions because it turns a passive holding into an active asset.

But it’s not risk-free. stETH can trade at a small discount to ETH during market stress—like during bank runs or exchange outages—because of temporary liquidity gaps. It’s also not backed by a bank or government. Its value relies entirely on the integrity of Ethereum’s proof-of-stake system and Lido’s smart contracts. Still, in 2025, it’s the most trusted liquid staking token, with over 20% of all staked ETH flowing through it.

What you’ll find below are real, no-fluff breakdowns of stETH and related crypto tools. You’ll see how it compares to other staking options, what happens when ETH prices swing, how DeFi protocols use stETH, and which platforms actually support it. No hype. No guesswork. Just facts from people who’ve used it—and avoided the traps.