stETH Recovers 1:1 Peg After Months Below Parity
The Lido Staked Ether (stETH) token, linked to Ethereum’s leading liquid staking platform, Lido, has fully regained its 1:1 peg to Ethereum (ETH). After trading at a -7% discount in mid-June, stETH now trades near parity (0.997 ETH per stETH).
Analytics firm Delphi Digital highlighted the recovery, attributing it to:
“The success of Ethereum’s Merge, coupled with rising Lido staking rewards (APR), which climbed from 3.85% to 5.52% post-Merge.”
How Lido’s Liquid Staking Works
Lido simplifies Ethereum staking by:
- Allowing users to deposit ETH and receive stETH (an ERC-20 token) in return.
- Offering daily staking rewards while maintaining liquidity—stETH can be traded like regular ETH.
- Incentivizing long-term ETH holders with compounding yields.
👉 Discover how liquid staking boosts DeFi participation
Challenges During the Downturn
Earlier in 2022, stETH faced significant hurdles:
- Institutional Sell-Offs: Firms like Alameda Research allegedly dumped stETH holdings, exacerbating the depeg.
- Merge Delays: Ethereum’s postponed upgrades (April and July 2022) weakened confidence in stETH.
- Celsius Network’s Liquidation: The lender’s stETH firesales further pressured the token’s value.
Recovery Drivers
Key factors behind stETH’s rebound:
- Successful Merge Implementation: Validated Ethereum’s proof-of-stake transition.
- APR Adjustments: Lido DAO increased rewards to attract buyers.
- Market Confidence: Traders regained trust in liquid staking mechanisms.
Lido’s Dominance in Liquid Staking
With 4.4 million ETH staked (~30% market share) and 143,000 ETH distributed as rewards, Lido remains the largest Ethereum staking pool.
FAQs
Why did stETH lose its peg to ETH?
The depeg resulted from mass sell-offs, Merge delays, and liquidity crises (e.g., Celsius Network’s collapse).
How does Lido’s stETH maintain liquidity?
stETH’s ERC-20 design lets users trade it freely, unlike locked ETH in traditional staking.
What’s the current stETH staking APR?
Post-Merge, Lido’s APR rose to 5.52%, up from 3.85%, sustaining demand.
👉 Explore Ethereum staking opportunities today
Keywords: Lido, stETH, Ethereum staking, liquid staking, Merge, APR, DeFi
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