According to Delphi Digital, “After spending almost 4 months trading below peg, $stETH has gradually returned to par with $ETH following the success of The Merge.”
The Staked Ether (stETH) token associated with Ethereum’s largest staking service, Lido, has regained its 1:1 peg to ETH. The token fell as low as -7% in mid-June but has recovered and now trades above 0.997 per ETH.
Delphi Digital announced the development on Twitter, noting an increase in Lido staking APR.
According to Delphi Digital,
“After spending almost 4 months trading below peg, $stETH has gradually returned to par with $ETH following the success of The Merge. Simultaneously, Lido staking APR increased from 3.85% to 5.52% and has remained at elevated levels ever since.”
Lido’s staking service allows users to deposit Ethereum, receive stETH in exchange, and earn a small percentage daily as a reward. It incentives Ethereum holders with stETH tokens for locking their ETH on its liquid staking platform.
Holders can trade the stETH ERC-20 token the same way they would trade Ether.
At a point, Lido DAO's proprietary version of Ethereum appeared to be the next DAO to fail. Some observers claimed in June that institutional crypto traders caused stETH to unpeg by selling stETH holdings.
They claimed that wealthy traders such as Alameda Research began acquiring stETH from lenders like Celsius Network, selling ETH, and taking out short positions on ETH when it was more favorable to stETH.
Also, the Ethereum development team postponed the Merge twice, both times around the time stETH was struggling: in April and July 2022. This didn’t help Lido’s situation.
However, stETH has mostly recovered. Notably, the recovery coincided with the DAO raising stETH's APR following Ethereum's Merge, an obvious way to boost stETH bids.
Lido currently has approximately 4.4 million ETH staked on its platform and has disbursed over 143,000 ETH rewards to stETH stakers. It is the largest Ethereum liquid staking pool, having 30% of all liquid staked ETH.
