Singapore-based crypto exchange Bit.com has launched Staked Ether (STETH) on spot and perpetual futures markets to meet the diversified needs of cryptocurrency users.
By listing STETH on the spot and futures markets, Bit.com seeks to enhance the token’s liquidity as a shift from the proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) framework called the merge continues to gain steam in the Ethereum network.
Per the announcement:
“STETH is an ERC-20 token pegged to Ether (ETH), the native currency of Ethereum. It is issued by Lido Finance, a DeFi protocol providing staking services on Ethereum’s proof-of-stake blockchain, Solana, Polygon, Polkadot, and Kusama smart contracting platforms.”
Therefore, STETH denotes ETH locked in the Ethereum 2.0 deposit contract, also known as the Beacon Chain, by validators. It is pegged to ETH in the ratio of 1:1.
On the other hand, STETH is a derivative asset that allows validators to unlock their liquidity and borrow more Ether from decentralized finance (DeFi) platforms because they already staked ETH cannot be withdrawn until a switch to a proof-of-stake framework happens.
Since Ethereum plays host to numerous decentralized applications (dApps), from gaming to non-fungible tokens (NFTs), STETH will play an instrumental role in enabling holders to compound yields from various DeFi protocols.
As of mid-June 2022, the total value locked (TVL) in STETH stood at $5.23 billion from 132,086 stakers, and Lido Finance expects the annual yield to be 4% with no lock-ups.
Since Justin Drake, an Ethereum researcher, recently disclosed that the merge was expected to materialize in August because testing was in the final stages, it remains to be seen whether it will happen because it has been quite elusive.
Nevertheless, Korpi, a DeFi educator, recently noted that switching to a proof-of-stake consensus mechanism would be a game-changer that would shift the selling pressure experienced in the Ethereum network to buy. After all, structural supply would change to structural buying.
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