wstETH (Wrapped stETH) is a derivative of stETH (staked Ether), created by Lido Finance, a leading liquid staking protocol. It is an ERC-20 token designed to represent a wrapped version of stETH, with some distinct characteristics that make it useful in specific DeFi applications.

What is stETH?
stETH is the tokenized version of staked Ether in the Ethereum proof-of-stake system via Lido Finance. When you stake ETH through Lido, you receive stETH, which represents your staked ETH and automatically accrues staking rewards over time.
The stETH balance increases due to staking rewards, reflecting the Ethereum rewards earned by validators participating in the network consensus.