Liquid Staking

What is Liquid Staking?

Imagine you’re staking a token like ETH or AVAX to help secure the blockchain and earn rewards. Normally, that token gets locked — you can’t use it or move it while it’s staked. Feels a bit like putting your money in a safe with no key until time’s up.

How It Works

You still stake your token… but you get a new token in return — one that represents your staked asset and can be used across DeFi while your original keeps earning yield. It’s like:

  • You lock your ETH to earn rewards

  • You receive stETH (staked ETH) in return

  • You can now use stETH in other DeFi strategies — lend it, swap it, farm with it!

Why People Love Liquid Staking

  • Earn passive rewards just like regular staking

  • Stay flexible — your assets aren’t ā€œtrappedā€

  • Use your staked tokens across DeFi to unlock more opportunities

What are the Risks?

Every superpower has its shadow, so here’s what to keep in mind:

  • Smart contract risk: The platform holding your staked tokens could have bugs. Stick to battle-tested ones.

  • Depeg risk: Your liquid staked token (like stETH) might temporarily lose value compared to the original — especially during high market stress.

Last updated

Was this helpful?