Why Does stETH Sometimes Trade Below 1 ETH?
stETH is supposed to track ETH 1:1. Sometimes it trades at a discount. Here's exactly why, and what it means for you.
Updated April 2026
Under normal conditions, 1 stETH trades for ~1 ETH. The two are mechanically linked: every stETH represents 1 ETH staked with Lido, plus accumulated staking rewards. So why does stETH sometimes trade at 0.99, 0.97, or — at the worst moment in its history — 0.94 ETH? The answer is in the difference between economic value and market price.
stETH and ETH are not the same asset
This is the key insight. stETH is a smart-contract receipt for staked ETH. To convert it back into raw ETH, you have two paths:
- Redeem through Lido. Submit a withdrawal request and wait. Pre-Shanghai upgrade (April 2023), this wasn't even possible — once you minted stETH, the only way out was the market. Post-Shanghai, you can redeem, but it takes hours-to-days under normal conditions and longer when many people exit at once.
- Sell on the open market. Trade your stETH for ETH on a DEX like Curve. Instant, but priced by whoever's on the other side.
Most of the time, both paths give you ~1 ETH per stETH. When something stresses the market, the second path can give you noticeably less.
When the discount appears
Three scenarios produce stETH discounts. The first two are common; the third is catastrophic and has happened only once at scale.
Forced selling under leverage
The 2022 Three Arrows / Celsius unwind is the canonical case. Big DeFi players had borrowed against stETH, and when their collateral dropped, they had to sell stETH to cover. The volume hit Curve's stETH/ETH pool faster than arbitrageurs could rebalance. stETH bottomed near 0.94 ETH for a few days. Anyone holding stETH and not forced to sell saw the discount close as the panic faded.
Pre-Shanghai withdrawal anxiety
Before April 2023, stETH could not be redeemed for ETH at all. The market priced in this lock — you were essentially holding a bond with no maturity date. The discount was structural until the Shanghai upgrade enabled redemptions. After Shanghai, the discount mostly disappeared because there's now an arbitrage path: anyone can buy stETH below peg and redeem for ETH.
Slashing event (catastrophic, hypothetical)
If Lido's underlying validators were slashed at scale, the redemption ratio would permanently reset below 1.0. This would represent a real, irreversible loss for stETH holders, not a temporary discount. Has not happened at meaningful scale. Lido's validator set is large and diversified specifically to make it unlikely.
What does this mean for me?
If you're holding stETH long-term and don't need to exit fast, the discount risk is mostly noise. Discounts have always closed within weeks. The bigger risks are smart-contract bugs and slashing events, not temporary market mispricings.
If you might need to exit during a crisis, plan around it. Either keep some raw ETH alongside your stETH for liquidity, or use a smaller position so a 5% transient discount doesn't matter. The discount itself is a liquidity premium — the market is paying you, briefly, to be the one who's willing to wait.
Other LSTs depeg too
rETH, cbETH, frxETH, and others all show occasional discounts. Smaller LSTs depeg more often because their secondary markets are thinner — a single moderate seller can move the price 1–2%. Bigger LSTs (stETH especially) hold peg more tightly under normal conditions but can produce dramatic moves when stress is severe enough.
Liquid staking tokens we track
Each LST page surfaces depeg history alongside live rates.
Frequently asked questions
Has stETH ever permanently lost peg?
No. Every discount in stETH's history has closed within days to weeks. The 2022 Three Arrows event saw the deepest dip (~0.94) but stETH was back at 0.99+ within two weeks.
Why doesn't arbitrage close the gap instantly?
Pre-Shanghai (2023), there was no redemption path — only the secondary market. Post-Shanghai, redemptions are possible but take time, and during a stress event the queue can become long. Arbitrageurs are constrained by their own capital and the time/cost of waiting in the redemption queue.
Is the discount a buying opportunity?
Mathematically, yes — you get more underlying ETH per dollar spent. But the discount usually shows up alongside broader market stress. You're buying ETH exposure at a discount, but ETH itself may be falling. Many investors who 'bought the dip' on stETH in 2022 saw further losses on ETH itself before things turned around.
What about the price snapshots StakingBoard tracks?
We capture spot prices for tracked assets on an hourly cadence. The asset detail page for stETH shows the recent price history, including any periods where it traded materially below ETH. Useful for visualising how often discounts actually appear.
Are smaller LSTs riskier for depeg?
Yes. Thinner liquidity means a single large seller can produce 1–2% temporary discounts even on calm market days. For LSTs under ~$100M TVL, expect occasional discount days that have nothing to do with the underlying protocol.