🧩 STRATEGIES

Liquid Staking

Definition

Liquid staking allows users to stake their tokens (e.g., ETH) and receive a liquid derivative token (e.g., stETH, rETH) in return. This derivative can be used across DeFi while the underlying asset earns staking rewards. It solves the capital inefficiency of traditional staking where assets are locked and unusable.

Example

💡 Example

Staking 10 ETH through Lido gives you 10 stETH, which earns staking rewards (~3-5% APR) while being usable as collateral on Aave or liquidity on Curve.

Risks to Consider

⚠️ Risks
  • Derivative depeg from underlying
  • Smart contract risk
  • Validator slashing risk

Common Questions

Is liquid staking safe?

Liquid staking adds smart contract risk on top of regular staking risk. Major protocols like Lido and Rocket Pool are battle-tested, but the derivative token can temporarily depeg from ETH during market stress.

Related Terms

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