Liquid Staking ETH via Lido

Introduction to Liquid Staking

When it comes to staking your Eth, you have 2 general options. The first is what we’ll call “traditional staking” and it lets token holders lock up their tokens to earn staking rewards.

The downside of traditional staking is that your staked tokens are locked up for a period of time. You can’t sell them or move them until they’re unlocked.

But what if there was a way you could staking rewards AND have the flexibility to sell or move your tokens at any time?

Enter liquid staking.

When a user deposits tokens in a liquid staking protocol they receive a liquid staking token (LST) in return. The LST earns yield while the users maintains the ability to sell, transfer or reuse those tokens to earn additional yield.

The biggest LST in crypto is $stETH – this is the stASSET token received when a user stakes their ETH on Lido. Let’s jump in and we’ll show you how you can benefit from liquid staking tokens.

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How Does Liquid Staking work? ($stETH Token Explained)

When you stake your $ETH on Lido, you receive tradable liquid tokens. On Lido these liquid staking token (LSTs) are called $stETH.

This token represents your staked ETH and continues to accrue ETH network rewards in real-time.

But here’s where things get interesting: instead of just letting your $stETH tokens sit in your wallet, you can put those tokens to work to earn more yield.

You can earn additional yield on your $stETH by lending or restaking on secondary markets.

In short, $stETH lets you receive staking rewards while still staying liquid — and opens the door to multiple DeFi strategies. It’s a win-win for ETH holders who want both yield and flexibility.

If you want to learn how the Milk Road PRO team earns yield on its $stETH, check out the Milk Road PRO Portfolio.

Pros and Cons of Liquid ETH Staking via Lido

Who Should Consider Liquid Staking?

If you value simplicity above everything else then liquid staking may NOT be the best option for you.

Liquid staking requires that you are comfortable with self custody wallets and making transaction on DeFi protocols. If you prefer to not learn how to do on chain activities then staking via a centralized exchange is a better option for you. Centralized exchanges are perfect for users that want to stake their ETH in the most user friendly interface.

But if you’re ok with self custody, want every opportunity to earn yield on your crypto, care about maintaining liquidity and flexibility without locking assets, then liquid staking is definitely something for you to consider.

How to Stake Ethereum on Lido: Step by Step

The instructions below will walk you through how to liquid stake your ETH with Lido Finance. There are other DeFi protocols that offer liquid staking solutions. We like Lido because it’s one of the industry leading staking providers and their protocol is regularly audited to avoid smart contract bugs.

We will be using the MetaMask wallet in this example which can be downloaded here.

Step 1: Getting Started With Lido

Once you have funded your ethereum staking wallet or swapped tokens for $ETH, you are ready to help secure Ethereum’s blockchain. Today we will only be staking $ETH, but note that the process for staking $SOL is very similar.

The first step is to head to https://lido.fi/ and press “Stake ETH” on the home page. You will be redirected to another site that will prompt you to connect your wallet.

Step 2: Link Wallet to Lido

Once you have clicked on “Connect Wallet”, you will be presented with this pop-up:

You have multiple wallets to choose from including your MetaMask and Ledger. In case you don’t see your wallet in the image above, you can click on “More wallets” to find it.

Step 3: Choose Ethereum as Your Network

Once you have successfully connected your wallet, you might be shown the following message:

You can either continue to stake your $ETH on Arbitrum or switch your network to Ethereum. We prefer staking directly on the Ethereum network.

Step 4: Staking Digital Assets With Lido

Once you have connected your wallet and switched your network to Ethereum, you’re ready to go!

All that’s left to do is input the amount of $ETH to stake. 

For every $ETH you stake, you will receive the same amount of $stETH in return (1-1 exchange rate). 

Note: You will need to hold extra $ETH in your wallet to pay for gas fees on your transaction. 

In case you wish to pay less gas, you can choose to stake on layer 2 networks like Arbitrum, Optimism, Base etc. 

• The top section shows your wallet’s $ETH balance, the amount you currently have staked and the percent of interest (APR) you can expect to receive.
• The middle area is where you choose how much you want to stake, as well as where you submit the transaction. You can choose “MAX” to select all of your holdings, minus the expected gas fee that you will pay.
• The bottom section shows you the expected outcome of the trade, the max fee that the Lido user will pay and the fee that Lido will receive on Ethereum staking rewards.

Note: Lido charges a 10% reward fee. This means that it will take 10% of all the ETH staking rewards earned by Lido users. It does not apply to your staked amount. 

Once you press submit and confirm the transaction in your wallet, Lido’s smart contracts will handle the rest and convert your $ETH to $stETH.

And just like that, you are now securing the network and earning rewards!

But wait… what do I do with all the $stETH that’s sitting in my wallet now? You’ll have to head into the Milk Road PRO Portfolio to find out how to earn yield on your $stETH.

ETH Liquid Staking Alternatives

Below, is a comparison of 3 major liquid staking protocols:

• Lido
• Rocket Pool
• Mantle

*all figures below are as of April 16th, 2025

	Name of Liquid Token (LST)	Staking APY	Total Staked $ETH	% of overall $ETH staked
Lido	$stETH	3.10%	9,295,043 $ETH	27.5%
Rocket Pool	$rETH	2.83%	685,312 $ETH	2.3%
Mantle	$mETH	2.93%	475,834 $ETH	1.4%

As you can see, Lido is leading in yield, total staked $ETH, and % of overall $ETH staked but let’s dive into why we like Lido the most:

• Lido is the first mover and largest provider in the liquid staking sector. With around $14B in TVL, Lido is the kingpin of the ETH staking sector. 
• As shown in the chart above, Lido provides a 3.10% staking APY which is great compared to their competitors and means more money in your pocket!
• Lido’s LST, $stETH is the most popular and utilized form of staked Ether. This means that it is the most widely acceptable, and has the most flexibility when it comes to earning additional yield in DeFi.

Is Buying $stETH The Same as Staking on Lido?

Yes! Another way to “stake your $ETH” is to buy $stETH on a decentralized exchange like Milk Road Swap.

Staking your $ETH on Lido or purchasing $stETH though a DEX both yield the same result.

Both these routes will gain the same staking rewards (in the forms of additional tokens), however, they do have one key difference:

While the price of Lido’s $stETH token is normally pegged 1:1 to the price of $ETH, market volatility and other extraneous events may sometimes lower $stETH’s price when compared to $ETH.

This means that you may be able to buy $stETH for less than $ETH. Check the current $stETH price before staking to make sure you’re getting the best deal.

Unstaking Process

• Lido: If you wish to unstake your $stETH on Lido, you’ll need to wait for the Lido unstaking process which typically takes 1-6 days. Despite the long withdrawal process, the $stETH-$ETH exchange is always 1-1. You will not get this exchange rate if you unstake via Milk Road Swap as it charges a small fee while Lido doesn’t.
  
• Milk Road Swap: “Unstaking” your $ETH via Milk Road Swap can be instant as you can swap $stETH back for $ETH at any time. You don’t need to wait for Ethereum staking withdrawals to be enabled; you can exit whenever you want. Despite the instant liquidity, you receive slightly less $ETH while unstaking through Uniswap as it charges a 0.15% fee.

There is a small tradeoff between urgency and quantity:

• Use Lido to unstake at a 1:1 ratio but has a waiting time of 1-6 days. 
• Use DEXs to swap your $stETH for $ETH within minutes but at a slightly lower exchange rate.  

How To Claim Your Rewards in Liquid Staking

With liquid staking, you don’t have to worry about claiming tradable liquid tokens manually. Instead, you’re earning rewards daily just by holding your tokens. These rewards are automatically added to your wallet.

There are different ways to earn yield on your LST but it really depends on the type of liquid staking token (LST) you are getting into. Some provide rewards by additional tokens while others do it by increasing the value of the token. Here’s an outline of the different types of LSTs and how you earn network rewards with each of them. 

Rebasing Tokens

Amongst various staking protocols, rebasing tokens are the most popular. These tradable liquid tokens distribute rewards in the form of additional tokens instead of the token increasing in value. This is done so the rebasing LSTs can remain pegged to the value of $ETH just like how $stETH does. 

If you hold $100 $stETH at an APR of 3%, in one years time, you will have 103 $stETH instead. This is how Lido provides yield to its stakers.

Note: Lido distributes rewards on a daily basis.

Non-rebasing / Reward-bearing Tokens

As the name suggests, these are opposite to rebasing tokens as non-rebasing LSTs increase in value with respect to the staking APR. As these tokens are not pegged to the price of $ETH, it allows users to gain staking rewards through increase in the token’s value. Rocketpool’s LST, $rETH, is one of the biggest non-rebasing LSTs in the Ethereum ecosystem. 

Dual-Token Model

While the two above are easy to understand, this model, adopted by Frax Finance, is more complex. This model has two tokens: one that is pegged to $ETH while the other that varies in price depending on staking returns. Frax stakers receive $frxETH which acts as a rebasing token. If you further stake your $frxETH on Frax, you receive $sfrxETH that behaves as a non-rebasing token. 

To Sum it up

Liquid staking issues a new token that represents your staked $ETH. You can then use this new token (liquid staking token or LST for short) to earn additional yield.

The biggest liquid staking protocol in crypto is Lido and its LST is called stETH. stETH lets you earn staking rewards while still staying liquid. It’s a win-win for ETH holders who want both yield and flexibility.

Frequently Asked Questions

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This report is for informational purposes only and should not be relied upon as a basis for investment decisions, nor is it offered or intended to be used as legal, tax, investment, financial or other advice. You should conduct your own research and consult independent counsel on the matters discussed within this report. Part performance of any asset is not indicative of future results.

It should also be noted that the writer(s) of this report may hold digital assets mentioned in the article at the time of writing.