Lido is a $33B+ TVL project.
Their wstETH token powers one of our Mainnet Ethereum Leverage Token strategies.
How does liquid staking work?🧵
@LidoFinance When you stake with Lido:
You stake any amount of ETH and in return receive a tradeable stETH token. You keep liquidity while earning staking rewards.
Liquid staking unlocks DeFi composability for stakers.
wstETH's structure:
→ Deposit ETH to Lido
→ Receive stETH (rebasing token)
→ Wrap to wstETH (non-rebasing)
→ Exchange rate increases as staking rewards accrue
→ Use wstETH in DeFi protocols
wstETH wraps staking rewards into a DeFi-compatible format, while maintaining full liquidity.
The asymmetrical leverage bands are the secret:
When your position is profitable, the token levers UP quickly to compound staking gains faster
When the position is unprofitable, the token will eventually lever DOWN to protect the position
This beats static manual rebalancing. Automation wins.
The wstETH/ETH loop:
Supply wstETH → Borrow ETH → Swap → Repeat (25x)
This amplifies staking yield exposure, net of borrow costs.
Three things made this work:
→ (Lido) Staking yield + tight correlation
→ (Morpho) ETH markets at scale
→ (Seamless) One-click looping + rebalancing
We removed friction, not created new behavior.
Try it:
🚨DYOR 🚨
⚠️ Audited by Cantina, but no DeFi protocol is risk-free
⚠️ High volatility = more rebalances = higher gas costs
⚠️ wstETH concentration: Position heavily weighted in Lido's staked ETH
⚠️ Leverage risk: Amplifies both gains AND losses
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