Liquid Staking FAQ: Frequently Asked Questions
What is a liquid staking token?
A token that represents staked ETH (or another proof-of-stake asset) while remaining transferable and usable in DeFi. When you stake ETH through Lido, you receive stETH. That stETH accrues staking rewards and can simultaneously be used as collateral on Aave, Morpho, or Spark. You earn the staking yield without giving up access to your capital.
What is the difference between liquid staking and restaking?
Liquid staking secures one network. Your ETH validates Ethereum and you get an LST in return. Restaking takes that same staked ETH and extends its security to additional protocols (called AVSs on EigenLayer). You earn extra yield from each AVS but accept additional slashing conditions. Liquid restaking wraps the restaked position into a transferable token (an LRT), the same way liquid staking wraps a native staking position.
Can I lose money with liquid staking?
Yes. Validator slashing reduces the underlying stake, which reduces what your LST is worth. Smart contract bugs in the liquid staking protocol can drain funds. LSTs can trade below their underlying value during market stress — stETH traded at a 6% discount during the June 2022 liquidity crisis. If you use an LST as collateral in a lending protocol, a depeg can trigger liquidation of your position.
How does stETH maintain its peg to ETH?
stETH is backed 1:1 by ETH staked in Lido validators. Since the Shapella upgrade in April 2023, users can withdraw stETH directly for ETH through Lido's withdrawal queue, which takes 1 to 5 days. This redemption mechanism provides a hard floor. Secondary market prices on Curve and Uniswap can trade slightly above or below the redemption value depending on demand and queue length, but arbitrageurs close the gap.
What yield does liquid staking pay?
Ethereum staking yield was between 3% and 4% APR through most of 2024 and 2025, set by network issuance and transaction tips. Different LST protocols take a fee on top: Lido charges 10% of staking rewards, Rocket Pool charges 14% (split between node operators and rETH holders). Restaking protocols add AVS rewards on top of base staking yield, but those rates vary by AVS and are often paid in the AVS's own token.
How is data on this page collected?
Protocol and TVL data comes from the DeFiLlama API. We track three DeFiLlama categories: Liquid Staking, Liquid Restaking, and Restaking. Chain data is derived from the chains field on each protocol's DeFiLlama listing. Data updates every 6 hours via automated sync. Protocol detail pages (audit history, hack events, contract addresses) also source from DeFiLlama.