FAQ About Lido Finance and Liquid Staking
What is Lido Finance?
Lido Finance is a liquid staking protocol that allows users to stake their ETH without locking it up. Users receive stETH tokens representing their staked ETH plus rewards, which can be used throughout the DeFi ecosystem.
Is Lido Finance safe?
Lido Finance has undergone multiple security audits and implements various safety measures. However, like all DeFi protocols, it carries inherent risks including smart contract vulnerabilities and validator issues. Users should conduct their own research before staking significant amounts.
Who created Lido Finance?
Lido Finance was founded by a group of industry experts from various blockchain companies and launched in December 2020. It is now governed by the Lido DAO through LDO token holders.
What is stETH?
stETH (Lido Staked ETH) is an ERC-20 token that represents your staked ETH plus accrued staking rewards on Lido Finance. It increases in quantity automatically as staking rewards are earned.
Is stETH the same as ETH?
No, stETH is a token that represents staked ETH plus rewards. While it aims to maintain a close 1:1 relationship with ETH, its market price can fluctuate based on various factors including liquidity and demand.
Can I convert stETH back to ETH?
Yes, you can swap stETH for ETH on various exchanges and DEXs like Curve. Once Ethereum withdrawals are fully enabled, you can also use Lido's withdrawal feature to convert directly, subject to the withdrawal queue.
How much ETH do I need to stake with Lido Finance?
There is no minimum requirement to stake ETH with Lido Finance. You can stake any amount, making it accessible to all users regardless of portfolio size.
How much can I earn by staking ETH with Lido?
Staking rewards typically range from 3–5% APR, depending on network conditions and validator performance. This rate fluctuates based on Ethereum network parameters and overall staking participation.
Are there any fees for staking with Lido?
Yes, Lido Finance takes a 10% fee from the staking rewards. For example, if the Ethereum network provides 5% APR, users will receive 4.5% after Lido's fee. This fee supports protocol development and operations.
What happens if validators get slashed?
Lido Finance has mechanisms to socialize slashing penalties across all stETH holders, minimizing individual impact. Additionally, Lido selects professional node operators with strong security practices to reduce slashing risks.
Can I use stETH in other DeFi protocols?
Yes, stETH is widely accepted across the DeFi ecosystem. You can use it for lending, borrowing, liquidity provision, and yield farming on platforms like Aave, Curve, Yearn, and many others.
What is the difference between stETH and wstETH?
stETH is Lido's rebasing token that increases in quantity to reflect rewards. wstETH (wrapped stETH) is a non-rebasing version where the value per token increases instead. wstETH is often preferred for certain DeFi integrations due to its simpler accounting.