Definition ∞ Digital tokens that represent staked cryptocurrency on a proof-of-stake blockchain, allowing users to retain liquidity while earning staking rewards. These derivatives provide a liquid representation of locked assets, enabling participation in other decentralized finance activities. They offer the benefit of capital efficiency by separating the staked asset from its yield-bearing claim. This innovation permits users to access the value of their staked assets without unstaking them.
Context ∞ Decentralized staking derivatives are a growing sector in DeFi, particularly as more blockchains adopt proof-of-stake consensus mechanisms. Regulatory bodies are increasingly scrutinizing these instruments to determine their classification and appropriate oversight. Their proliferation raises discussions about systemic risk and the potential for increased leverage within the broader digital asset market.
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