What Is Liquid Staking Token?
A Liquid Staking Token (LST) is a tokenized receipt for assets staked in a Proof-of-Stake validator or staking pool. When you stake ETH through Lido, you receive stETH — a liquid token that represents your staked ETH plus accumulated staking rewards. The stETH can be freely traded, used as DeFi collateral, or bridged to other chains, while the underlying ETH remains staked and earning rewards.
How Liquid Staking Token Works
Major LSTs include stETH (Lido), rETH (Rocket Pool), cbETH (Coinbase), and mSOL (Marinade on Solana). LSTs accrue value in different ways: rebasing (stETH balance grows daily) or exchange-rate appreciation (rETH price increases relative to ETH). Each LST has different trust assumptions, decentralization properties, and DeFi integration depth.
Why It Matters for Traders
LSTs have become a cornerstone of DeFi because they eliminate the choice between staking yield and DeFi participation. You can stake ETH (earning ~3-4% staking yield) AND use the stETH as collateral for borrowing (accessing DeFi leverage) simultaneously. This capital efficiency has made LSTs one of the largest DeFi categories by TVL and a fundamental building block for yield optimization strategies.
