WSTETH Wrapped stETH

Use Cases of Wrapped stETH

Wrapped stETH is designed to facilitate integration with various DeFi protocols by maintaining a constant balance, unlike stETH, which undergoes regular rebasing. Here are some key use cases:

• DeFi Lending: Wrapped stETH can be used as collateral in lending platforms, allowing users to borrow other cryptocurrencies while retaining the staking benefits of their Ether.
• Liquidity Provision: It can be used in liquidity pools on exchanges such as Uniswap and Balancer, enabling users to participate in yield farming and other DeFi activities.
• Cross-Chain Integrations: Wrapped stETH can be bridged to multiple blockchain networks, including Ethereum, Arbitrum, Optimism, and others, enhancing its utility within the DeFi landscape.
• Staking Rewards: Users can continue to earn staking rewards on their Wrapped stETH, which are reflected through an underlying share system rather than daily balance adjustments.
• DeFi Compatibility: It serves as a rebase-free alternative to stETH, making it suitable for use in protocols that require consistent token balances, such as Uniswap and MakerDAO.

Wrapped stETH Overview

Wrapped stETH is a tokenized receipt of an ETH staking deposit that accounts for staking rewards and penalties. It is designed to provide composability to DeFi protocols that are incompatible with rebasing tokens like stETH.

Pros of Wrapped stETH

• Liquidity and Versatility: Wrapped stETH allows for more flexible use of staked ETH, enabling it to be used in various DeFi protocols while still earning staking rewards.
• Constant Token Quantity: Unlike stETH, which rebases to reflect staking rewards, Wrapped stETH maintains a fixed quantity of tokens, with the exchange rate adjusting to account for staking rewards.
• DeFi Compatibility: It is specifically designed to work seamlessly with DeFi protocols that cannot handle rebasing tokens, making it a practical choice for these applications.

Cons of Wrapped stETH

• Complexity: The use of Wrapped stETH involves additional layers of complexity, including the need to understand how the wrapper contract works and how the exchange rate is adjusted.
• Dependence on Underlying Assets: The value of Wrapped stETH is directly tied to the performance of the stETH it represents, which can be affected by staking rewards and penalties.
• Market Dynamics: The market for Wrapped stETH may be subject to liquidity and volatility risks, which can impact its price and usability in DeFi protocols.

Founders of Wrapped stETH

Wrapped stETH is a product developed by Lido Finance, which was co-founded by a team of blockchain developers and entrepreneurs. Key founders include:

• Konstantin Lomashuk
• Vadim Koleoshkin
• Other blockchain developers and entrepreneurs

These founders have a strong background in software engineering, blockchain technology, and finance, which has helped them create a successful liquid staking platform.

Investors in Wrapped stETH

Wrapped stETH is part of the Lido protocol, which has received funding from various investors. However, specific information about the investors in Wrapped stETH itself is not readily available. Here are some key points about Lido and its funding:

• Lido Funding: Lido has received funding from a combination of venture capital and community funding rounds. For example, GTE, a related project, raised $10 million through such funding rounds.
• Investor Information: Detailed information about the investors in Wrapped stETH is not provided in the available sources. The focus is more on the functionality and benefits of Wrapped stETH rather than its investor base.
• Lido's Ecosystem: Lido's ecosystem, which includes Wrapped stETH, is supported by a broad range of stakeholders within the crypto community, including users, developers, and institutional investors. However, specific names or entities are not listed in the provided sources.

Halal Status of Wrapped stETH

Wrapped stETH is considered halal. The reason is that it is based on Ethereum (ETH), which is rated as "Comfortable" (halal) by Practical Islamic Finance. Since Wrapped stETH is a wrapped version of stETH, which is a staking token for Ethereum, it does not introduce any new elements that would make it non-halal.

Key Points:

• Base Token: Ethereum (ETH) is considered halal.
• Wrapped Version: Wrapped stETH is a non-rebasing version of stETH, meaning its balance changes only upon transfers, minting, and burning, and it accrues staking rewards automatically.
• Halal Rating: The underlying asset, Ethereum, has a "Comfortable" rating, indicating it is halal.