Liquid Staking Protocols

Liquid staking protocols are platforms that allow users to stake their tokens while receiving a liquid, tradeable receipt token in return. This removes the barrier of locking up capital, enabling users to participate in governance or decentralized finance while still earning staking rewards.

These protocols operate by pooling user funds and delegating them to professional validators. The protocol takes a small fee for managing the infrastructure and distributing rewards.

Because the receipt token is liquid, it can be used in other protocols, effectively compounding yield. However, the reliance on a central protocol adds a layer of smart contract risk, and the market for the receipt token must remain liquid for the strategy to be effective.