BlockchainIntermediate#DeFi#Staking
LST (Liquid Staking Tokens)
L
Definition
Tokens that represent staked assets (like stETH for ETH), allowing users to earn staking rewards while keeping their capital liquid for DeFi.
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Concept Diagram
Key Takeaways
1
LSTs represent your staked ETH plus accumulated rewards in a tradeable token form
2
They solve the illiquidity problem of traditional staking by letting you use staked assets in DeFi
3
stETH from Lido is the most popular LST with billions in total value locked
4
LSTs enable composability — you can use them as collateral, in liquidity pools, or for yield farming
Practical Example
You stake 10 ETH on Lido and receive 10 stETH. While your ETH earns ~3.5% staking rewards, you can simultaneously deposit stETH into Aave as collateral to borrow USDC — double utilization of the same capital.
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Related Terms
Blockchain
EigenLayer StakingThe process of 'Restaking' ETH or LSTs to secure multiple networks simultaneously, providing hyper-efficient yield.
Blockchain
LRT (Liquid Restaking Tokens)A new layer of staking where LSTs are restaked on platforms like EigenLayer to secure additional services, issuing a new liquid token.
Blockchain
Proof of Stake (PoS)A consensus algorithm that chooses validators based on the number of tokens they hold and are willing to 'stake'.
Strategy
StakingThe process of locking up digital assets to support a network's operation in exchange for newly minted rewards.
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