Lido and stETH: The Dominant LST

Lido is the largest liquid staking protocol on Ethereum. It holds around 9 million ETH staked as of early 2026, roughly 28% of all staked ETH. stETH is the token users receive; it rebases daily to reflect accrued staking rewards.

How Lido works

1. User deposits ETH to Lido contract.
2. Lido pools deposits into 32-ETH batches.
3. Distributes batches to whitelisted node operators (currently ~40 professional operators).
4. User receives stETH 1:1.
5. Every day, stETH balance rebases upward as validators earn rewards.
6. Lido takes 10% of yield as protocol fee (split with operators).

stETH properties

• Rebasing token: balance increases; price stays near 1 ETH.
• wstETH is the non-rebasing wrapper (balance constant, price rises). Preferred in DeFi.
• Deep liquidity on Curve stETH/ETH pool.

Yield source

Standard Ethereum staking yield (~3% APR base) plus MEV rewards captured by MEV-Boost enabled operators (~0.5-1%).

Withdrawals

Enabled since Shapella upgrade (April 2023). Withdrawal takes 1-5 days depending on exit queue length.

The centralization concern

28%+ is close to the 33% threshold at which a single entity could stall Ethereum consensus. Lido governance (LDO holders) does not directly control validators, but concentration is a live topic. Lido has moved toward Distributed Validator Technology (DVT via SSV, Obol) to reduce operator concentration.

Where stETH fits

• Anyone staking Ethereum who values liquidity + DeFi composability.
• Not: users who prefer minimum trust surface (solo staking wins there).
• The default LST for institutional yield strategies via wstETH.