Wrapped stETH

wstETH (wrapped stETH) is a non-rebasing ERC-20 token that represents ownership of stETH. It exists to enable compatibility with protocols and systems that do not support rebasing tokens.

Unlike stETH, which increases in balance over time, wstETH maintains a constant token balance. Instead, its value appreciates as staking rewards accrue to the underlying stETH.

When stETH is wrapped into wstETH:

• The stETH balance is locked in the wrapper contract.

• An equivalent amount of wstETH is minted to the user.

• Staking rewards continue to accrue to the underlying stETH, increasing the stETH-per-wstETH exchange rate over time.

Key Attributes of wstETH:

• Non-rebasing: token balances remain constant over time

• Value-accreting: price increases as staking rewards accumulate

• Fully backed by stETH, and therefore staked ETH.

• DeFi-friendly: compatible with protocols that rely on fixed balances (e.g. AMMs, lending protocols, vaults)

• Freely wrappable and unwrappable into stETH at any time

In practice, stETH and wstETH represent the same economic exposure to Lido staking rewards—the difference lies purely in how rewards are accounted for (balance rebasing vs. price appreciation).