What is stETH? ETH exposure and a changing balance

stETH is a liquid staking token representing a share of ETH staked through Lido. Its token balance can change as accounting updates reflect rewards and possible penalties. It is not the same asset as Ethereum’s native ETH.

Why does the balance change?

Lido reflects pool accounting changes in token balances through a process called rebasing. The technical token documentation allows for positive or negative updates, and reports can be delayed. Seeing more units in a wallet does not establish a dollar profit.

Example

Alex holds 10 stETH. A hypothetical net balance update of 0.1% would make that 10.01 stETH without a new transfer. The rate is an arithmetic illustration, not an annual return or a daily promise. If ETH’s market price falls over the same period, the holding can lose value despite the higher token count.

Is stETH interchangeable with ETH?

It has an economic connection to ether, but a market swap need not price each stETH at exactly 1 ETH. A protocol withdrawal involves a request and completion process; it is not the same transaction as selling on an exchange. The stETH definition describes the represented stake, not an instant, risk-free exit. The Lido review examines the relevant application screens.