Liquid Staking Definition - Glossary

Liquid staking is staking while maintaining liquidity. Users earn rewards and can trade staked assets using derivative tokens.

Liquid staking is a mechanism allowing users to stake their cryptocurrency to earn rewards while retaining liquidity. Unlike traditional staking, where assets are locked and inaccessible, liquid staking issues derivative tokens representing the staked assets. These derivative tokens can be freely traded or used in other decentralized finance (DeFi) applications. This approach offers flexibility and enables users to benefit from staking rewards without sacrificing the ability to move or invest their assets elsewhere. Liquid staking enhances capital efficiency and provides more opportunities for users to engage with various financial strategies in the crypto ecosystem.