Lets talk about stETH

stETH is a promising token that is basically pegged to ETHUSD. It basically works like this: You give ETH to Lido, and they give you stETH (You can also buy stETH that is already circulating on an exchange or dex or whatever) but what happens is that any address that holds stETH will have more stETH added each day. How can this work without disrupting the peg? Because all stETH is backed 1:1 by ETH on the beacon chain which will become available after the merge. the ETH its generated every day by Lido validators who are staking ETH. They take a small percentage of the staking reward, but since they got thousands of validators generating staking rewards its still a good business for them and they can pass most of the reward to stETH holders.

The best part is that in order to use ETH in most defi you must use wrapped ETH, or wETH, so it becomes an erc-20 token and can interface with defi. But stETH is already an ERC-20 token so you dont need to wrap it, on top of that you are generating yield every day just by holding it, its pretty cool. So you can use your stETH as you would wrapped ETH on for example Aave ie. as collateral and gain even more yield. Its like yield ception. I think because of this stETH will become more widespread in defi than any other token but also most ETH will eventually be staked by Lido because of this and Lido is a relatively decentralized organisation, so no biggie. But lets see.