Wrapped stETH

Wrapped stETH (wstETH) is Lido Finance's non-rebasing ERC-20 wrapper for staked Ether (stETH). Operating primarily on Ethereum, with bridged deployments expanding to networks such as Base, Unichain, and Monad, wstETH is designed to improve compatibility with decentralized finance (DeFi) protocols that do not support rebasing token balances. Unlike standard stETH, which updates holder balances daily to reflect staking rewards, wstETH maintains a constant token balance while its value increases relative to stETH through an appreciating exchange rate.

The tokenomics of wstETH operate on a demand-driven supply model governed by trustless wrapping and unwrapping mechanisms. It features no pre-mine, team allocations, or emissions schedule, and supply expands or contracts based solely on user deposits of stETH. The wrapper is integrated into the broader Lido DAO governance structure, which uses LDO token voting alongside a Dual Governance framework that allows stETH and wstETH holders to delay or contest certain governance proposals. The underlying wstETH contract has been audited by MixBytes and is supported by an active Immunefi bug bounty program.

While the core wstETH smart contract has recorded no direct exploits, the token remains subject to systemic DeFi risks, third-party integrator vulnerabilities, and regulatory attention. On May 28, 2025, third-party platform Cork Protocol suffered a security exploit totaling approximately $12 million, during which an attacker withdrew 3,761 wstETH and swapped it to ETH. In February 2025, a multi-signature custody failure at the Bybit exchange led to the loss of more than $1.4 billion in assets, including underlying stETH. Additionally, while no enforcement actions or lawsuits have been filed directly against Lido or wstETH, liquid staking protocols face categorical regulatory scrutiny, prompting Lido to publish a formal response in December 2025 regarding guidance from the U.S. SEC Division of Corporation Finance.