Investing in Lido protocol stETH on Bybit can appear to be a lucrative opportunity to take advantage of the potential rewards of cryptocurrency staking. But now that the Shanghai Ethereum upgrade is complete, many are wondering about the impact of this fork on the Liquid Staking Derivatives. However, it seems that this update has boosted the popularity of staking tokens.
Understanding stETH
For investors, staking rewards is one of the best ways to maximize returns from their ETH holdings. After The Merge (September 2022) and the move to Proof-of-Stake (PoS) consensus, users can earn ETH 2.0 rewards by staking their ETH on the Beacon Chain. However, this staked amount was blocked until the end of the merger, which was completed on April 12.
ETH 2.0 staking issues
Not only were ETH staked on the Beacon Chain locked until the end of the merger, but users who wanted to become validators had to stake a minimum of 32 ETH. The user will only receive their rewards after the merger and they will also not be able to use their funds for anything else.
Faced with the security and inaccessibility of funds, users were increasingly reluctant to stake. For Ethereum, this means less ETH on the Beacon chain to secure the blockchain. Ideally, users can stake to earn rewards and continue to have access to their funds for other purposes (loans, borrows, etc.).
Liquid staking with Lido Finance
To overcome this liquidity problem, Lido Finance introduced staked Ether (stETH). Thanks to which, users can stake the amount of ETH they want, while having this ETH available for other uses on DeFi platforms.
This solution allows users to participate in securing the Ethereum network with any amount of ETH and earn ETH 2.0 staking rewards. Indeed, Lido groups the ETH of a user with those of others to reach the 32 ETH required by Ethereum. Users receive stETH in return with a ratio of 1:1. They can then continue to use their stETH without locking their tokens.
Trading stETH on Bybit
Bybit offers traders and investors an array of services and products with an emphasis on security and transparency. Supported products include stETH exchange.
To trade stETH on Bybit, investors must first deposit the underlying staked tokens into their account. They can then use these coins to buy stETH, which they can then trade on the exchange.
With this offer, Bybit offers investors a different option to trade on the potential rewards of staking. But now that the merger is complete, what about stETH and their holders?
With stETH staking, Bybit offers its users and traders the opportunity to generate passive income. By holding stETH, users will receive a daily return on their accounts. Among the advantages, investors can grow their cryptocurrencies with an APR of up to 6.5%.
Traders can stake their ETH to mint stETH via Bybit Earn. The platform takes care of the mint for you. The user is therefore exempt from gas costs, which allows the gains to be maximized. Stakeholders can also buy stETH directly from the Spot market with USDT.
They can then use the staked token as collateral in their Unified Trading Account (UTA). This allows them to trade on the platform with their desired leverage while continuing to generate passive income from their stETH. The advantage is that users can stake elsewhere, on Curve for example or Uniswap, a feature unavailable on other platforms.
Finally, Bybit is the only one to offer stETH which is gaining popularity in the cryptocurrency market. Other exchanges have created their own staking token which clearly does not enjoy the same traction as stETH.
Shanghai upgrade: what impact on stETH?
Ethereum’s Shanghai update was completed on April 12. stETH holders are likely keen to know how the event will affect their holdings, now that users can withdraw their ETH. stETH users will be able to request redemption for ETH by exchanging their stETH for official ETH.
Ethereum’s Shanghai update was completed on April 12. Nearly two weeks after the event, the effects are starting to materialize. While stETH holders were wondering about the future of their holdings, the market trend reveals a rather positive impact of the update. As the price increases, so does the number of tokens in circulation. StETH staking remains an opportunity to benefit from passive income while participating in the security and decentralization of Ethereum.
DeFi experts believe that releasing all that ETH could benefit liquid staking platforms. As ETH withdrawals will be subject to caps, staked ETH will not be available at the same time. stETH will continue to attract investor interest.
Conclusion
Investors buy stETH to benefit from the interest generated by staking. Proof of this is with the gross growth of the market capitalization of this type of tokens in recent times. However, it is difficult to know whether this interest will continue long after Shanghai.
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