Staked Ether - a token of concern!

6/20/2022, 09:05 AM
Staked Ether - a token of concern!
Ether is the second-largest cryptocurrency in the world by market value. Cryptocurrency is causing havoc in the digital asset market — and this time, it's not a stablecoin. Staked ether, or stETH, is a token that's supposed to be worth the same as ether. But for the past few weeks, it has been trading at a widening discount to the second-biggest cryptocurrency, fanning the flames of a liquidity crisis in the crypto market.
On Friday, stETH fell as low as 0.92 ETH, implying an 8% discount to ether.
Here's everything you need to know about stETH, and why it has crypto investors worried.
What is stETH?Each stETH token represents a unit of ether that has been "staked," or deposited, in what's called the "beacon chain."Can ethereum topple bitcoin as the crypto king?CryptoEthereum, the network underpinning ether, is in the process of upgrading to a new version that's meant to be faster and cheaper to use. The beacon chain is a testing environment for this upgrade.
Staking is a practice where investors lock up their tokens for a period of time to contribute to the security of a crypto network. In return, they receive rewards in the form of interest-like yields. The mechanism behind this is known as "proof of stake." It's different from "proof of work," or mining, which requires lots of computing power — and energy.
To stake on Ethereum currently, users have to agree to lock away a minimum 32 ETH until afterthe network upgrades To Ethereum 2 .0However , A platform called Lido Finance lets users stake any amountof eth er And receive A derivative token called stirrup ,which can then be traded Or lent on other platforms .It Is An important part Of decentralized finance , which aims toreplicate financial services like lending And insurance using blockchain technology .stirrup Isn 't A stablecoin like tether Or terraUSD ,The algorithmic"stablecoin That collapsed last month under The strain Ofa bank run . It' s more like an IOU — The idea being That stirrup holders can redeem Their tokensfor An equivalent amount Of eth once The upgrade completesDecoupling from EtherWhenThe Terra stablecoin project imploded , Stethic 's price began trading belowether' s As investors raced for The exit