Glossary · L
Liquid Staking Token (LST)
A transferable token that represents staked assets while they remain locked with validators — for example stETH, rETH, or mSOL. Also searched as liquid staking derivative (LSD). LSTs let holders earn staking rewards and still use the token in DeFi as collateral or liquidity. Distinct from LRTs, which add a restaking layer on top of LSTs.
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How Liquid Staking Token works in practice
An LST is the receipt for staked capital that remains tradable. It is what makes staking composable: the same capital can secure the network and serve as collateral simultaneously.
Worked example
Stake ETH, receive an LST, supply it to a lending market, borrow against it. The stake keeps earning consensus rewards throughout.
Figures are illustrative and chosen to be checkable, not live market data.
The mistake that costs people money
LSTs can trade below their redemption value when exits are queued. A lending market pricing one by exchange rate rather than market price can hold collateral worth less than it believes during exactly the stress it needs to be right about.
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Liquid Staking Token: common questions
- What is Liquid Staking Token?
- A transferable token that represents staked assets while they remain locked with validators — for example stETH, rETH, or mSOL. Also searched as liquid staking derivative (LSD). LSTs let holders earn staking rewards and still use the token in DeFi as collateral or liquidity. Distinct from LRTs, which add a restaking layer on top of LSTs.
- How does Liquid Staking Token work in practice?
- An LST is the receipt for staked capital that remains tradable. It is what makes staking composable: the same capital can secure the network and serve as collateral simultaneously.
- Can you give an example of Liquid Staking Token?
- Stake ETH, receive an LST, supply it to a lending market, borrow against it. The stake keeps earning consensus rewards throughout.
- What do people get wrong about Liquid Staking Token?
- LSTs can trade below their redemption value when exits are queued. A lending market pricing one by exchange rate rather than market price can hold collateral worth less than it believes during exactly the stress it needs to be right about.
- Where can I learn more about Liquid Staking Token?
- Our full guide, What Is Liquid Staking?, covers Liquid Staking Token in depth with worked scenarios and the risks involved. This glossary entry is the short definition.