stETH Collateral

Definition ∞ stETH Collateral refers to the use of staked Ethereum, specifically Lido Staked ETH, as security for borrowing other digital assets within decentralized finance protocols. Users deposit stETH into a lending platform to obtain loans, leveraging their staked assets without unstaking them. This allows participants to earn staking rewards while simultaneously accessing liquidity. It is a common asset in decentralized lending markets.
Context ∞ The role of stETH Collateral is a significant topic in decentralized finance news, particularly concerning its liquidity, peg stability, and potential systemic risks. Market events have highlighted the importance of maintaining sufficient liquidity for stETH and managing its price deviations from Ethereum. Future developments in liquid staking derivatives and risk management frameworks will continue to shape its utility and perceived safety. Its stability is important for broader DeFi market health.