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What Is ‘Liquid Staking’ and Its Risks?

Staking assets while receiving a tradable derivative token for use in DeFi; risks include smart contract failure and de-pegging.
Greeks.Live03.11.25

What Is ‘Liquid Staking’ and Its Risks?

Liquid staking is a mechanism that allows users to stake their coins while receiving a tradable token (a derivative) representing their staked assets. This derivative token can then be used in DeFi protocols, providing liquidity while the original assets are locked.

The risks include smart contract risk, de-pegging of the derivative token, and centralization of staking providers.

What Are the Alternatives to Midpoint Matching in Dark Pools?
What Are the Risks Associated with Smart Contract-Based DeFi Platforms?
What Is the Difference between a Rebase Token and a Liquid Staking Token?
What Is a ‘Tokenized Option’ and How Does It Relate to a Smart Contract?

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