Liquid staking is an innovative concept in the cryptocurrency space that allows users to stake their tokens while retaining liquidity. Unlike traditional staking, where tokens are locked and inaccessible, liquid staking provides a tokenized representation of the staked assets, referred to as LSTs (Liquid Staking Tokens).
These LSTs can be traded, used as collateral, or deployed in various decentralized finance (DeFi) applications, such as EigenPie, a liquid restaking platform within EigenLayer.
Liquid staking offers several compelling advantages over traditional staking methods, such as:
- Enhanced Liquidity
- Increased Capital Efficiency
- Lower Barriers to Entry
- Greater Flexibility
These are the main benefits I can think of, but I would love additional input, especially if you're experienced with DeFi. Feel free to share some of the associated risks and any liquid staking platforms you've explored.