What Are Liquid Staking and Liquid Staked Tokens (LSTs)?

Liquid staking is like staking with a twist. Normally, when you stake your crypto, those assets are locked up and inaccessible for a set period. 

Liquid staking flips that around by letting you stake your tokens while still being able to use them in other ways. It works through platforms or protocols that issue you a derivative token, often referred to as a liquid staked token (LST), in exchange for staking your original assets. These LSTs act as proof of your staked position and can be used in the DeFi ecosystem for things like lending, trading, or providing liquidity.

The appeal of liquid staking is the flexibility it gives you. You can earn staking rewards without completely sacrificing liquidity or opportunities to put your crypto to work elsewhere. It’s like having your cake and eating it too, though you might still face risks like smart contract vulnerabilities or the usual fluctuations in token values. 

For example, you can buy wstETH, which is Lido’s token. You can then pair it with regular ETH and yield farm with it. So you get the rewards that inherently come with wstETH while also receiving farming rewards from that liquidity pool.

For those who want to maximize their returns while staying involved in a robust DeFi economy, liquid staking and LSTs present an intriguing option. However, as with anything in crypto, due diligence is key to understanding the associated risks and rewards.

Lido is the number one liquid staking project in all of DeFi and the number one project…period. It has over $38 billion in TVL.