Lido (stETH)
Lido is a liquid staking protocol associated with stETH, an Ethereum LST used across many DeFi venues. Review Lido's official materials for the current staking flow, fee model, withdrawal process, and token mechanics before using it.
Stake · Stay liquid
Liquid staking: earn rewards with a liquid staking token (LST)
Liquidly is a liquid staking app and guide for turning staked ETH exposure into a liquid staking token (LST) you can hold, track, and use across DeFi while rewards accrue. Use this page to understand the tradeoffs before connecting a wallet or choosing a provider.
- Earn
- Staking rewards
- Keep
- Liquidity (LST)
- Custody
- Self-custody
01 — Overview
What is liquid staking?
Liquid staking lets you stake a proof-of-stake asset and receive a liquid staking token, or LST, that represents your staked position.
With normal solo staking, your asset is committed to validator duties and liquidity is limited until you exit. With many pooled liquid staking services, you deposit a PoS asset such as ETH, the protocol or provider handles validator operations, and you receive an LST such as stETH, rETH, cbETH, or sfrxETH. That LST can usually be held in your wallet, transferred, traded, or used in DeFi while staking rewards accrue through the token balance or exchange rate. Liquid staking is different from solo staking because you are relying on smart contracts, validator operators, and secondary-market liquidity rather than running validators yourself.
- Stake exposure stays active while the LST remains transferable.
- The LST is not the same as the underlying asset and can trade at a discount or premium.
- Pooled staking can reduce operational work, but it introduces protocol, provider, and market risks.
02 — How it works
How liquid staking works with an LST
Liquid staking converts a staked position into an LST that can move through DeFi while rewards accrue to the token.
The core flow is simple: deposit, receive, use, and later redeem or exit. The details vary by provider. Some LSTs rebase by increasing wallet balances; others accrue value through a rising exchange rate against the underlying asset. In every case, check the provider's redemption rules, withdrawal queue, fees, and smart-contract design before assuming instant one-to-one liquidity.
- Deposit a PoS asset such as ETH into a liquid staking protocol or provider.
- Receive a liquid staking token (LST) that represents the staked position.
- Use the LST in compatible DeFi apps, or hold it while rewards accrue.
- Redeem, unwrap, swap, or unstake later according to the provider's rules and market conditions.
- 1Deposit a PoS asset
Choose a supported proof-of-stake asset, commonly ETH, and deposit it through a liquid staking protocol, provider, or compatible interface after verifying the official contract and current terms.
- 2Receive an LST
The protocol issues a liquid staking token, or LST, that represents your staked position. Depending on the design, rewards may accrue through a rebasing balance or an increasing exchange rate.
- 3Use the LST in DeFi
Hold the LST in self-custody, transfer it, swap it, or use it in compatible DeFi apps. Each added strategy can add smart-contract, liquidation, slippage, and liquidity risk.
- 4Redeem or unstake later
Exit by redeeming through the provider, unwrapping where supported, waiting through an unstaking queue, or selling the LST on the market. The best route depends on fees, timing, and available liquidity.
03 — Tokens
Liquid staking token & LST providers
Liquid staking token examples include stETH, rETH, cbETH, and sfrxETH; each has a different provider model, reward design, and risk profile.
These names are market context, not a recommendation. Lido, Rocket Pool, Coinbase, and Frax are widely recognized examples in the Ethereum liquid staking ecosystem, but their contracts, custody assumptions, validator sets, fees, redemption paths, and DeFi integrations are not interchangeable. Liquidly treats LSTs as assets that need due diligence, not as generic ETH substitutes.
- Read official documentation before depositing or swapping.
- Compare redemption mechanics and secondary-market liquidity.
- Check whether rewards accrue by rebasing balance, token exchange rate, or a vault mechanism.
Rocket Pool (rETH)
Rocket Pool describes itself as a decentralized Ethereum staking protocol with liquid and node-staking products. Its rETH token is commonly referenced as an Ethereum liquid staking token with its own protocol design and operator model.
Coinbase (cbETH)
Coinbase Wrapped Staked ETH, or cbETH, represents ETH staked through Coinbase and is designed as a transferable wrapped token. Coinbase notes that cbETH can trade differently from ETH because it reflects staked ETH plus accrued rewards.
Frax (sfrxETH)
Frax's sfrxETH is described in Frax documentation as an ERC-4626 vault token designed to accrue staking yield from Frax ETH validators. Its reward mechanics differ from simple balance-rebasing LSTs.
04 — Compare
Liquid staking vs solo vs pooled staking
Liquid staking improves liquidity, solo staking maximizes direct control, and pooled or exchange staking reduces setup work with added trust assumptions.
The right route depends on capital, technical skill, custody preference, and risk tolerance. Solo staking generally requires validator operations and a meaningful deposit size. Pooled staking can lower the minimum and abstract validator work. Liquid staking adds a tradable LST, which can help with liquidity but also creates token, smart-contract, and market risk.
- Solo staking gives the most direct validator control.
- Liquid staking is built for users who value DeFi composability and liquidity.
- Pooled or exchange staking may be simpler but varies widely in custody and provider risk.
| Method | Liquidity | Watch for |
|---|---|---|
| Liquid staking | High (LST) | LST depeg, smart-contract risk, provider design, validator and slashing risk |
| Solo staking | Low | Validator uptime, technical setup, direct slashing/penalty exposure, exit timing |
| Pooled/exchange | Varies | Custody terms, provider trust, fees, redemption rules, centralization concerns |
05 — Security
Liquid staking risks: depeg, smart contracts, validators
Liquid staking is not risk-free: an LST can depeg, smart contracts can fail, validators can be penalized, and provider concentration can matter.
An LST can trade below the underlying asset if liquidity thins, redemptions slow, confidence drops, or broader market stress hits DeFi. Smart-contract bugs, oracle issues, governance decisions, validator downtime, and slashing can also affect outcomes. Self-custody improves control over your tokens, but it does not remove protocol risk, market risk, wallet risk, or the need to manage private keys securely.
- Depeg risk means selling an LST may return less than the underlying asset value.
- Smart-contract and oracle risk can affect deposits, redemptions, or integrations.
- Validator and slashing risk can reduce rewards or principal depending on the system design.
- Large provider concentration can create decentralization concerns for the underlying network.
06 — Fees
Liquid staking fees, rewards & LST costs
Liquid staking rewards are variable, APY is indicative only, and fees can come from the protocol, the network, and DeFi activity around the LST.
Most users should treat displayed APY as a live estimate, not a promise. Rewards can change with network participation, validator performance, priority fees, MEV policy, provider fees, and protocol rules. You may also pay network gas to deposit, swap, approve, bridge, redeem, or use the LST in DeFi. Some protocols take a fee from staking rewards before distributing the remainder to token holders.
- Protocol fee on rewards
- Network gas for on-chain actions
- Indicative APY that varies and is not guaranteed
- Possible swap spread or slippage when entering or exiting through secondary markets
Protocol fee on rewardsNetwork gasVariable APY (not guaranteed)
Liquid staking tokens can trade below the underlying (depeg) and carry smart-contract and slashing risk. APY is variable and not guaranteed.
07 — FAQ
Liquid staking FAQ
What is liquid staking?
Liquid staking is a way to stake a proof-of-stake asset while receiving a liquid staking token, or LST, that represents the staked position. Instead of waiting with an illiquid stake, you can usually hold, transfer, trade, or use the LST in DeFi. The LST may accrue rewards through its balance or exchange rate. It is still exposed to protocol, validator, and market risk.
How is liquid staking different from normal staking?
Normal staking often means locking assets directly with validator infrastructure or using a provider without a freely transferable token. Liquid staking adds an LST, which can make the position more usable before you exit staking. The tradeoff is complexity. You gain liquidity and DeFi composability, but you add smart-contract risk, possible depeg risk, provider risk, and fees that do not exist in the same way with direct solo staking.
What is a liquid staking token?
A liquid staking token is a tokenized representation of a staked asset. Examples in Ethereum market context include stETH, rETH, cbETH, and sfrxETH. An LST can track rewards in different ways: some balances rebase, while others increase in value against the underlying asset over time. Because an LST trades in markets, its price can move away from the underlying asset, especially during stress or low liquidity.
Is liquid staking safe / what are the risks?
Liquid staking is not risk-free. Main risks include smart-contract bugs, oracle issues, governance changes, validator downtime, slashing, provider concentration, wallet compromise, and secondary-market liquidity problems. Self-custody can keep the LST in your wallet, but it does not remove protocol or market risk. Before depositing, verify official documentation, contract addresses, fees, withdrawal rules, and whether the provider has the risk controls you expect.
Can I lose money / depeg?
Yes. An LST can trade below the value of the underlying asset, often called a depeg or discount. That can happen if many holders want to exit, liquidity is thin, redemptions are delayed, or trust in a provider changes. If you sell during a discount, you may receive less than the expected underlying value. Slashing, smart-contract failures, and DeFi liquidation risk can also create losses.
What rewards can I earn?
Rewards depend on the network, validator performance, provider fees, protocol rules, and market conditions. Any APY shown for liquid staking should be treated as indicative only, not guaranteed. Some protocols take a fee from staking rewards before passing the rest to holders. You should also account for gas, swap slippage, bridge costs, and DeFi strategy risk, which can materially change your net outcome.