Liquid Staking

Liquid staking is a method of staking tokens on a proof-of-stake network while receiving a transferable receipt token that represents the staked position and accrues rewards.

How it works

A holder deposits a proof-of-stake asset with a protocol that stakes it with validators and mints a receipt token in return. Lido issues stETH for staked ETH, Rocket Pool issues rETH, and on Solana Jito issues JitoSOL and Marinade issues mSOL. The receipt token can be traded, lent, or used as collateral while the underlying stake continues to earn consensus and, in some cases, execution-layer rewards. Redemption returns the underlying asset once any unbonding period clears.

Two accounting models exist. In a rebasing model, as used by Lido's stETH, the token balance in a wallet increases as rewards accrue, so one stETH targets one ETH. In a reward-bearing model, as used by rETH and JitoSOL, the token quantity stays fixed and its exchange rate against the underlying rises. If a protocol accrues 4 percent over a year, one rETH redeemable for 1.00 ETH at issuance becomes redeemable for about 1.04 ETH.

Why it matters

Liquid staking lets an institution capture staking yield without surrendering the ability to move or deploy capital, which matters when a native unbonding queue can run from days to weeks. The receipt token also becomes a building block across lending markets and collateral systems, concentrating exposure in a few issuers. The main risks are a depeg, where the receipt token trades below the value of its underlying during stress, validator slashing that reduces the backing, and smart-contract failure in the staking protocol. Issuance and market-share data by protocol appear in Bitwise Cites Allium as Primary Data Source in Its Q3 2026 Staking Report.

Related terms

• Liquid staking token (LST)
• Proof of stake
• Slashing
• Restaking
• Unbonding period

Frequently asked questions

How does a liquid staking token differ from directly staking?

Direct staking locks the asset until an unbonding period clears. Liquid staking issues a transferable receipt token representing the staked position, so the holder can trade or use it as collateral while rewards accrue.

What is a depeg in liquid staking?

A depeg occurs when the receipt token trades below the value of its underlying staked asset, usually during market stress or when redemptions face unbonding delays, as stETH did briefly in 2022.

What is the difference between rebasing and reward-bearing tokens?

Rebasing tokens like stETH increase a wallet's balance as rewards accrue while targeting a one-to-one value. Reward-bearing tokens like rETH keep quantity fixed and raise their exchange rate against the underlying.

See the data behind this post. Browse the staking and liquid-staking tables, or read Blockchain Data Quality Standards for Datasets for how the records are put together.

Allium provides onchain data infrastructure. Companies named in this article may be Allium customers, prospects or commercial counterparties. The authors and other Allium personnel may hold positions in the assets discussed. This article is informational only and is not investment, legal or tax advice. Data and information last reviewed: October 23, 2026.