Liquid Staking
Also known as liquid staking token LST LSTs liquid staking derivative LSD
Liquid staking lets users stake tokens on a proof-of-stake network while receiving a tradable receipt token in return. The receipt token represents the staked deposit plus rewards and can be used in DeFi while the original tokens remain staked. This avoids locking capital, but adds risks: the provider’s smart contracts, validator performance, the receipt token trading below its underlying value, and concentration of stake in a few providers.
Related terms
- Staking Locking tokens to help secure a network in exchange for rewards. Consensus
- Proof of Stake Consensus secured by validators who put tokens at risk. Consensus
- Liquidity Pool Tokens pooled in a contract to enable trading or lending. DeFi
- Automated Market Maker A DEX design that prices trades with a formula and token pools. DeFi
- Maximal Extractable Value Profit captured by reordering or inserting pending transactions. DeFi
- Impermanent Loss The cost to liquidity providers when pooled token prices diverge. DeFi