stLuna is a token that represents staked Luna in Lido, combining the value of the initial deposit + staking rewards. stLuna tokens are minted upon deposit and burned when redeemed. stLuna tokens represent the user's share of overall staked Luna. stLuna and bLuna are ruled by a joint set of smart contracts. So, bLuna and stLuna are tokens that represent the same thing — staked Luna. The main distinction between them is that bLuna's rewards have to be claimed from the rewards contract and stLuna's rewards are automatically compounded. So, bLuna's price is pegged to Luna's price and stLuna's underlying amount of Luna is increasing as staking rewards are accrued.

Making the rewards automatically re-staked makes the stLuna token more usable in DeFi protocols. Integration became much easier because any other protocol doesn't have to deal with rewards: stLuna underlying Luna amount just increases with time (in case there are no slashing events). With stLuna, no rewards need to be passed through the bridge. One can easily get the stLuna/Luna exchange rate and understand how many Lunas he or she can get for the amount of wrapped stLuna they have.

Lido is a liquid staking solution for Terra (Luna), backed by industry-leading staking providers. Lido lets users stake their Luna without locking assets or maintaining infrastructure whilst participating in on-chain activities, e.g. lending. Liquid staking protocols allow users to earn staking rewards without locking assets or maintaining staking infrastructure. Users can deposit tokens and receive tradable liquid tokens in return. The DAO-controlled smart contract stakes these tokens using elected staking providers. As user's funds are controlled by the DAO, staking providers never have direct access to the users' assets.