Plain English
A liquid staking token represents a deposit of an asset (usually ETH) into a staking pool. Lido’s stETH, Rocket Pool’s rETH, Coinbase’s cbETH, Frax’s sfrxETH. The LST accrues staking rewards while remaining tradable and usable as collateral across DeFi.
How it actually works
You deposit ETH into the staking protocol; it spreads across thousands of validators; the protocol mints LST shares to you. As validators earn rewards, the LST either rebases (your balance grows, like stETH) or appreciates (the redemption rate grows, like rETH and cbETH). You can swap, lend, or LP the LST anytime.
What it means for you
LSTs unlocked ETH staking at scale and are now the second-largest DeFi category. For HNW positioning, holding stETH or rETH is the default productive form of ETH exposure — you capture ~3–4% staking yield without locking. Layer it: deposit LST as collateral in Aave or Morpho, borrow a stablecoin against it, and you have liquid leverage on staked ETH.
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Educational content only. Not investment, tax, or legal advice.