A liquid ETH: Staked Ether (stETH) is an ERC-20 token that represents a stake in the Ethereum 2.0 network. StETH is created when a user deposits Ether (ETH) on the Ethereum 2.0 platform to participate in the staking process. Staking is a mechanism by which ETH holders can contribute to the security and validation of transactions on the network in exchange for ETH rewards.
With the launch of Ethereum 2.0, the network has transitioned from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) consensus mechanism. In this new model, validators (or "stakers") must lock up a certain amount of ETH (minimum 32 ETH) to become eligible to validate transactions and create new blocks.
Features:
stETH allows users to maintain exposure to their locked ETH stake while having the ability to use it in other applications or services compatible with ERC-20 tokens. stETH holders continue to earn staking rewards in proportion to their stake, and these rewards are typically distributed automatically in the form of additional stETH.
It is important to note that stETH is not the only token representing a stake in Ethereum 2.0. Several platforms and services have created their own tokens to represent staked ETH, such as Binance Staked Ether (BETH) or Lido Staked Ether (LDO). However, all of these tokens operate on similar principles, allowing holders to maintain exposure to their staked ETH and earn staking rewards.
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