Liquid Staking Explained: What It Is & Where to Start
Liquid staking lets you earn staking rewards while keeping your assets usable. Learn how it works, what platforms to trust, and how to use it in DeFi.
What Is Liquid Staking?
Liquid staking allows you to stake assets (like ETH) and still receive a liquid token (e.g. stETH) that represents your staked position. This lets you earn rewards while using the token elsewhere.
Why Use Liquid Staking?
- Earn staking rewards while keeping access to capital
- Use derivative tokens in DeFi (lending, LP, collateral)
- Avoid lock-up periods or slashing from running your own node
Top Liquid Staking Platforms in 2025
- Lido: Largest provider for ETH; token = stETH
- Rocket Pool: Decentralized alternative; token = rETH
- Binance ETH Staking: Custodial but easy to use
How to Use stTokens in DeFi
Liquid staking tokens can be used in lending protocols (e.g. Aave), LP pools (e.g. Curve), or as collateral (e.g. MakerDAO) to enhance your yield.
Risks of Liquid Staking
- Smart Contract Risk: Liquid staking relies on smart contracts that could be vulnerable.
- Liquidity Risk: You may not be able to redeem your stToken 1:1 quickly during market stress.
- Protocol Centralization: Some solutions like Lido are heavily dominant.
Frequently Asked Questions
Is liquid staking better than regular staking?
It depends. Liquid staking offers more flexibility but adds risks from protocols and DeFi integrations.
Can I lose my funds with liquid staking?
Yes, especially if the platform is hacked or the token depegs. Use trusted providers and keep risk in mind.
Which is the best platform for liquid staking?
Lido is most used, but Rocket Pool is popular among decentralization advocates.