Ethereum LST

Definition ∞ Ethereum LST refers to Liquid Staking Tokens on the Ethereum blockchain. These are derivative tokens that represent staked Ether (ETH) in a proof-of-stake network. LSTs provide stakers with liquidity for their otherwise locked ETH, allowing them to participate in other decentralized finance activities while still earning staking rewards. This mechanism helps maintain capital efficiency and broadens participation in Ethereum’s consensus process. LSTs typically accrue value relative to the underlying staked ETH and its rewards.
Context ∞ Ethereum LSTs have become a central component of the DeFi ecosystem following Ethereum’s transition to proof-of-stake. The growth and market share of various LST protocols are closely watched, influencing liquidity and yield strategies across decentralized applications. Regulatory scrutiny and the potential for centralization among major LST providers remain ongoing topics of discussion and concern within the crypto community.