What is Liquid Staking?

Liquid staking is the next iteration of staking, and it can address the inverse problem associated with a typical staking model, which is liquidity. When staking your tokens, you’re essentially locking them up. You can’t move them around because that would penalize you in one way or the other. Tokens used in staking are illiquid, which isn’t strictly a bad thing, because you’re contributing to overall network security. Liquid staking gives you the ability to maintain the liquidity of your staked tokens, freeing you to use them actively in other DeFi activities – you receive a tokenized version of your staked assets. When you stake your cryptocurrency via a liquid staking protocol, the protocol issues you a crypto asset, known as a liquid staking token. You can then utilize the LST across a wide range of DeFi activities, which includes but is not limited to things such as lending and borrowing, regardless of what it’s staked into, all while earning the staking rewards associated with the protocol your LST is staked into.