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Ethereum Staking in Practice

· 6 min read

In this lesson, we’ll go step-by-step through how to stake Ethereum (ETH) on the Ethereum mainnet using Lido Finance, the largest liquid staking provider.
We’ll also look at how to do the same on other networks such as Arbitrum or Optimism, where transaction fees are much lower.

Before starting, make sure you’ve watched the previous lessons on staking and liquid staking — they explain the underlying mechanics and how liquid staking tokens like stETH and wstETH work.

Step 1 — Preparing to Stake ETH on the Ethereum Mainnet​

I’ve already transferred a small amount of ETH — around $70 — to my wallet for demonstration purposes.
Staking such a small amount isn’t profitable (because Ethereum gas fees are relatively high), but it’s ideal for showing the full process.

Later, we’ll compare this to staking on Arbitrum, where a transaction costs only about $0.02.

  1. Open the Lido Finance website and navigate to the Stake Ethereum section.
  2. Click Connect Wallet and select your wallet (MetaMask, Frame, etc.).
  3. If your wallet is connected to another network (e.g., Arbitrum), switch to Ethereum Mainnet.
    • Click the network indicator at the bottom of the wallet interface.
    • Choose Ethereum.
    • If the switch doesn’t happen automatically, you can use Frame Wallet — it switches networks seamlessly across protocols.

Step 2 — Staking ETH via Lido​

Once connected to Ethereum Mainnet:

  • Enter the amount you want to stake (for example, 0.015 ETH) and leave some ETH for gas fees.
  • At the time of this example, gas costs about $6.31 — high for such a small stake, but fine for demonstration.

Click Stake, confirm the transaction, and wait for it to process.

Lido charges a 10% commission on staking rewards.
The current Ethereum staking yield is about 3% annually, so your effective return will be around 2.7%.

After confirmation, staking becomes active.
Your wallet will show a notification:

“The balance of this asset may change dynamically.”

This means your stETH balance will automatically increase over time as Lido’s smart contract distributes validator rewards to token holders.

How Lido Works​

Lido collaborates with professional validators that handle block production and transaction validation.
Your deposited ETH is delegated to these validators, who earn rewards for maintaining network security.

Here’s the process:

  1. You deposit ETH → receive stETH (1:1 representation of your staked ETH).
  2. Validators earn rewards → the total ETH balance of the pool grows.
  3. Smart contracts automatically increase stETH balances proportionally for all holders.

If validators collectively increase the pool from 1,000 ETH to 1,010 ETH, then the total stETH supply also grows from 1,000 to 1,010 — keeping the 1:1 peg consistent.

This is why your wallet balance increases daily — your share of the total pool stays constant, but the pool itself grows as validators earn new ETH.

Lido updates balances once every 24 hours, so you’ll see your stETH amount increase the next day.

All staking data and rewards are visible on the Lido dashboard, under the Rewards section.

Step 3 — Withdrawing or Exchanging stETH​

To withdraw staked ETH:

  1. Go to the Withdraw section on Lido.
  2. Enter the amount you want to withdraw.
  3. Submit your withdrawal request.

The process takes about 24 hours.
After that, you’ll need to make one more transaction to receive your unstaked ETH back.

Alternatively, you can use a DEX aggregator to instantly swap stETH → ETH, skipping the waiting time.
However, the rate will be slightly lower (typically 0.3–0.5% below the official rate).
This is the price of instant liquidity.

For large deposits, the difference becomes noticeable — for example, unstaking 1,000 ETH instantly might return 999.8 ETH instead of the full amount.

Gas Fee Considerations​

Don’t stake small amounts on the Ethereum mainnet.
Gas fees can easily consume your rewards — or even exceed them.

For example:

  • Staking $70 worth of ETH may cost $6–$8 in fees.
  • Unstaking might later cost another $15–$20.

Ethereum gas fees fluctuate with network congestion, so staking is only practical when the rewards outweigh transaction costs.

Step 4 — Staking on Other Networks​

The auto-increasing balance feature (stETH growing daily) works only on the Ethereum mainnet, since validator rewards are directly tracked there.

On other networks like Arbitrum, Optimism, or Polygon, this process works differently.
Instead of stETH, users hold wstETH (wrapped stETH).

What Is wstETH?​

  • wstETH doesn’t increase in quantity — its value rises relative to ETH.
  • It represents a fixed share of the stETH pool.
  • The exchange rate is maintained by Lido Finance and adjusts dynamically.

Over time, 1 wstETH becomes worth more ETH as staking rewards accumulate.

Example:
If you buy 1 wstETH for 1 ETH today, after two months it might be worth 1.04 ETH — the staking yield is reflected in the price, not the token balance.

How to Stake ETH on Other Networks​

You don’t need to manually bridge ETH to Arbitrum or Optimism.
Instead, you can simply buy stETH or wstETH directly on those networks.

Example:

  1. Open your DEX aggregator (VirtUs Swapper, 1inch, etc.).
  2. Choose ETH as the token to sell.
  3. Choose stETH or wstETH as the token to buy.
  4. Confirm the swap.

Gas fees on these networks are usually less than one cent, and the exchange rate is almost 1:1.

You’re not staking directly — you’re buying already staked ETH that someone else bridged.
Your tokens are fully backed by real staked ETH held by validators on Ethereum mainnet.

Price Peg and Arbitrage​

If wstETH trades below its fair value (e.g., 0.995 ETH), arbitrage traders buy it cheaply and bridge it back to Ethereum mainnet, redeeming it for 1 ETH.
This maintains the price parity between ETH and its liquid-staked equivalents.

On Ethereum — staking yield increases your token balance.
On other networks — staking yield increases the token’s price.

Both mechanisms represent the same income — staking rewards.

Summary​

  • Lido Finance is the leading liquid staking provider for Ethereum, holding around 72% market share (≈ $33 billion or 10 million ETH).
  • Other providers include Rocket Pool, Coinbase Staking, and Frax ETH — all follow the same principle:
    • Users stake ETH → Validators earn rewards → Providers distribute rewards → Users receive yield-bearing tokens.
  • Lido charges around 10% of rewards as a service fee (others vary from 5–25%).
  • Each staked ETH is fully backed 1:1 by real ETH locked in validator contracts.
  • On the mainnet, yield appears as growing token balance (stETH).
  • On other networks, yield appears as rising token price (wstETH).

Final Takeaways​

  • Staking small ETH amounts on Ethereum mainnet is not cost-effective due to high gas fees.
  • For smaller deposits, it’s better to buy liquid-staked ETH (wstETH) on Layer 2 networks.
  • The yield mechanism differs by network, but the principle remains identical:
    • On mainnet: balance increases over time.
    • On L2: token price increases over time.
  • Arbitrage keeps the peg stable between ETH and its liquid-staked derivatives.
  • Always use reputable providers (Lido, Rocket Pool, Coinbase) and verify domains before connecting your wallet.

These materials are created for educational purposes only and do not constitute financial advice.