Staked ether, or stETH, is a cryptocurrency token that represents an equivalent amount of ether (ETH) that has been staked. The concept of stETH is designed to solve the liquidity problem associated with staking ETH, where staked ETH becomes locked and illiquid until certain network upgrades occur.
When users stake their ETH through Lido, they receive an equivalent amount of stETH tokens in return. These tokens are pegged 1:1 with the value of ETH and can be freely traded, sold, or used in DeFi protocols, providing liquidity to the staker. Moreover, stETH holders are entitled to staking rewards, which are automatically re-staked, increasing the amount of stETH tokens in the holder's wallet over time.
In May 2023, with the completion of the Ethereum Shanghai upgrade, Lido also completed the upgrade to version V2. The most critical feature includes supporting liquidity staking users to withdraw from Lido at a 1:1 ratio, that is, users can initiate to exchange their stETH in their wallet for ETH at anytime.
Above are only for introduction, not intended as investment advice.