Liquid Staking Tokens (LST)
Liquid staking tokens represent a user's staked assets on a blockchain network. These tokens allow users to participate in Proof-of-Stake (PoS) networks without sacrificing liquidity.
Traditionally, when a user stakes their cryptocurrency in a PoS network, the assets are locked up for a certain period and cannot be used. Liquid staking introduces a tokenised version of these staked assets that users can trade, sell, or use in decentralised finance (DeFi) applications while they're still staked.
These liquid staking tokens are usually issued at a 1:1 ratio to the staked assets and earn rewards in the same way as the original staked assets. Therefore, they allow users to simultaneously secure the network, earn staking rewards, and have the flexibility to participate in other parts of the crypto economy.