StETH is a derivative of ETH that is staked on Lido. Lido is a decentralized protocol allowing users to stake ETH and participate in the consensus mechanism of Ethereum. Staking helps to secure the Ethereum network under a proof-of-stake consensus mechanism, which is more energy-efficient and scalable.

Lido is a liquid staking solution for Ethereum backed by several industry-leading staking providers. Its main advantage is that it enables participating in Ethereum’s PoS consensus mechanism without a minimum stake. Staking on Ethereum has some drawbacks, such as requiring a minimum of 32 ETH to stake, locking up tokens for an indefinite period of time until withdrawals are enabled during the Shapella upgrade, and exposing users to slashing risks if validators misbehave or go offline.

Lido aims to solve these problems by allowing users to stake any amount of ETH with multiple professional validators who share the slashing risks and provide high uptime. Lido liquifies ETH and creates staked ETH liquid by issuing stETH tokens. stETH can then be used for trading, lending, or as collateral across DeFi applications.


## Who Are the Founders of StETH?

Lido is a decentralized autonomous organization (DAO) that is governed by its community members. The team behind Lido consists of various node operators, developers, auditors and partners who contribute to the project’s security, functionality and growth.

Some of the node operators include P2P Validator, Chorus One, Staking Facilities, Certus One, Stakefish and others. Some of the developers include Lido DAO members, Paradigm Research, Sigma Prime and others. Some of the auditors include Quantstamp, Sigma Prime and Trail of Bits. Some of the partners include Curve Finance, 1inch Network, Yearn Finance and others.


## How Does StETH Work?

When you stake your ETH with Lido, you receive stETH in exchange. This token represents your stake in the Ethereum network and can be traded or held like any other ERC-20 token. In return for staking your ETH, you receive a share of the rewards generated by the network. These rewards are paid out in the form of ETH. The protocol auto-converts the rewards into stETH and accumulates all staking rewards in the user’s account.

One of the key benefits of stETH is that it is liquid and can be traded on various decentralized exchanges, making it easy to buy and sell. Traditional staking, on the other hand, permanently locks up funds until a pre-determined period is over. Consequently, funds cannot be accessed during that time. With stETH, you can earn rewards while still having access to your funds at any time.

StETH has the extra benefit of providing a higher yield than traditional staking. This is because Lido's staking pool is designed to maximize rewards by delegating funds to a variety of validators across multiple networks. By diversifying its stake across different validators, Lido is able to reduce the risk of slashing, which is the penalty for validators who act maliciously or fail to follow the network's rules. This approach allows Lido to offer a higher yield on stETH compared to traditional staking, making it an attractive option for investors looking to earn passive income on their ETH holdings.