What is Wrapped stETH (wstETH)?
Wrapped stETH (wstETH) is a non-rebasing wrapper around Lido's stETH token. While stETH uses a rebasing mechanism where your token balance increases daily, wstETH uses a value-accruing model where the token price increases relative to stETH over time.
How wstETH Works
When you wrap stETH into wstETH, you receive a fixed number of wstETH tokens. As staking rewards accumulate, the exchange rate of wstETH to stETH increases rather than your balance changing. When you unwrap, you receive more stETH than you originally deposited, reflecting earned rewards.
The conversion is always possible at the protocol level: 1 wstETH can be unwrapped for an increasing amount of stETH over time. The initial ratio started at 1:1 but has grown as rewards accumulated.
Why Use wstETH Over stETH?
DeFi Compatibility: Many DeFi protocols, including lending markets and yield vaults, cannot properly handle rebasing tokens. wstETH provides the same underlying yield exposure in a format compatible with standard ERC-20 mechanics. Tax Efficiency: In some jurisdictions, the value-accruing model may have different tax implications than receiving daily balance increases. Cross-Chain Usage: wstETH is the standard Lido token bridged to Layer 2 networks like Arbitrum, Optimism, and Base.Key Features
Same Underlying Yield: wstETH earns identical staking rewards to stETH. Composable: Works with any protocol expecting standard ERC-20 tokens. Liquid: Trade, use as collateral, or LP wstETH while earning ETH staking rewards.Risks
Smart Contract Risk: wstETH adds a wrapper contract layer on top of stETH, introducing additional smart contract risk. Slashing Risk: Subject to the same validator slashing risks as stETH. Depeg Risk: Can trade below fair value during market stress.Data Disclaimer
TVL and APY figures are sourced from on-chain data and may fluctuate. Data as of February 2026.