Wrapped stETH (wstETH) is an Ethereum-based cryptocurrency designed specifically for decentralized finance (DeFi), offering users the flexibility to combine Ethereum staking rewards with participation in various DeFi applications.
By staking ETH through Lido’s liquid staking platform, users receive stETH, representing their Ethereum stake. However, ordinary stETH undergoes daily rebasing to reflect accumulating staking rewards, altering its balance. To provide a more predictable and integration-friendly asset, stETH can be “wrapped” into wstETH, which maintains a constant token balance. Instead of fluctuating daily, wstETH’s underlying value steadily increases to reflect accumulated staking gains, simplifying its use in DeFi protocols.
Because of wstETH’s predictable token balance and compatibility, it specifically addresses interoperability challenges posed by ordinary stETH in liquidity pools, lending platforms, yield aggregators, decentralized exchanges, and various DeFi smart contracts. Wrapped stETH opens pathways for investors to leverage their staked Ethereum without sacrificing staking income, promoting greater capital efficiency and broader DeFi engagement.
Currently, the total and circulating supply of Wrapped stETH stands at approximately 3,476,696 tokens. At present, wstETH trades around $3,042.37, reflecting a market capitalization of roughly $10.6 billion and a daily trading volume near $24.7 million. Recent upticks in price correspond with bullish sentiment across the broader cryptocurrency market, leading analysts to eye further potential upward moves towards the $4,000 range, while noting intermediate support around $2,500.
Wrapped stETH was created by the developers behind Lido, the well-known liquid staking platform. Though wstETH itself has not experienced major security breaches, stETH has encountered losses tied to vulnerabilities in external systems and protocols that interacted with it. Thus, users are encouraged to consider external protocol risks alongside risks inherent to staking products.
Overall, wstETH’s uniqueness lies in its hybrid characteristics—a tokenized form of accrued Ethereum staking rewards that remains stable and highly interoperable, specifically crafted for seamless integration into DeFi ecosystems.
