Liquid Staking Token(LST)
A token representing staked assets that remains liquid and usable in DeFi while the underlying earns staking rewards.
In-Depth Explanation
LSTs (stETH, rETH, cbETH) solve the illiquidity problem of staking. Instead of locking ETH directly, you deposit with a liquid staking provider and receive a token that accrues staking rewards. This LST can be used as collateral, traded, or LP'd. LSTs have become foundational DeFi collateral but introduce additional smart contract and depeg risks.
Related Terms
Liquid Staking
Staking tokens through a protocol that issues a liquid derivative token representing the staked position.
Staking
Locking tokens in a protocol to earn rewards, secure a network, or gain governance rights.
Restaking
Using already-staked assets to simultaneously secure additional protocols or services, earning multiple yield streams.
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Collateralized Debt Position
CDPA loan where users deposit collateral to mint or borrow assets, with liquidation risk if collateral value falls.
Lending Protocol
A DeFi application that matches lenders with borrowers through smart contracts, enabling permissionless borrowing and lending.