Liquid Staking Tokens (LSTs)
(Redirected from Liquid Staked Derivative (LSD))
- A term that got popular in late 2022, albeit grudgingly by some community members due to the abbreviation LSD. The term is mainly used in relation to Ethereum, however, it is also being experimented with in the Cosmos ecosystem and other PoS systems.
- After some months, LSDs as a term got changed into Liquid Staking Tokens (LSTs), in order to go away from the drug term.
- From Coingecko (20-1-2023):
"Due to the lockup nature of [[[staked]]] ETH, Liquid Staking was invented to allow users would receive a receipt token for staking ETH with a liquid staking provider, and this receipt token is also known as a Liquid Staked Derivative (LSD).
An LSD is a liquid token that is similar to most other crypto tokens as it is fully fungible, transferable, fractional, etc.
LSDs essentially unlocks the liquidity of your staked ETH, as it has a similar value of the underlying staked ETH that is temporarily locked. Using the LSD token essentially allows you to indirectly use your staked ETH in DeFi activities such as selling, providing liquidity, lending it, using it as collateral, etc, to earn additional yield on top of the staking yield that you earn."
- The most famous ones as of 2-2023 are stETh, rETH, frxETH and cbETH, from Lido, RocketPool, Frax and Coinbase, respectively. StaFi is one of the players building out LSDs on a multi-chain scale. dsETH is another LSD, by Index Coop, which is an index of multiple LSDs.
