A Liquid Restaking Token (LRT) is a derivative token that represents staked assets within a restaking protocol, providing liquidity while the underlying assets remain locked. These tokens allow users to maintain capital access and potentially earn additional yield by utilizing the LRT in other decentralized finance applications. LRTs typically represent a claim on both the original staked asset and any accrued restaking rewards. They enhance capital efficiency for stakers.
Context
Liquid Restaking Tokens are a significant development in the Ethereum ecosystem and a frequent subject in crypto news, particularly with the growth of EigenLayer. Debates often focus on the potential for increased systemic risk due to layered leverage and the security implications of extending trust to multiple protocols. Understanding LRTs is crucial for analyzing the evolving landscape of staking derivatives and their impact on DeFi liquidity.
The LRT primitive transforms staked capital into a composable, multi-yield asset, dramatically increasing Ethereum's capital efficiency and security collateral.
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