Crypto glossary
Liquid staking
Liquid staking lets users stake proof-of-stake tokens and receive a tradable token in return, so the staked value can still be used in DeFi.
When you deposit ETH into a liquid staking protocol such as Lido or Rocket Pool, the protocol stakes it with validators and gives you a liquid staking token (LST), like stETH or rETH. That token represents your claim on the staked ETH plus accumulated rewards, and it can be sold, lent or used as collateral without waiting for an unbonding period.
Some tokens grow in balance as rewards accrue, as stETH does, while others grow in value relative to ETH, as rETH does. Liquid restaking protocols built on EigenLayer go a step further, reusing staked ETH to secure additional services for extra yield.
Each layer adds risk: smart contract bugs, validator slashing and the possibility that the token trades below the value of the underlying asset during market stress, as stETH did in 2022. The large share of staked ETH controlled by a few protocols also raises centralization concerns.
Example
A user deposits 10 ETH into Lido, receives about 10 stETH, and then supplies that stETH as collateral on Aave to borrow USDC while still earning staking rewards.
Related terms
Latest articles on Liquid staking
- Liquid Staking Holds Steady in Q2 With Only a 1.3% ETH Outflow
- EEA Taps Lido to Unlock Liquid Staking for Institutional ETH Treasuries
- SOL Strategies Shares Rally 20% on Rapid Liquid Staking Growth
- ETF Proposal Targets Exposure to Solana Liquid Staking Ecosystem
- XRP Reactivates Its Network: Whales, Liquid Staking and Open Interest Recovery Mark Late 2025
