LRT Market

Definition ∞ The LRT Market refers to the ecosystem surrounding Liquid Restaking Tokens, which are digital assets designed to enhance yield for staked cryptocurrencies, particularly Ethereum. These tokens allow users to restake their liquid staking tokens (LSTs) on protocols like EigenLayer to earn additional rewards from Actively Validated Services (AVS). LRTs address the liquidity limitations of traditional staking by providing tradable representations of restaked assets. This innovation aims to maximize capital efficiency within the Proof-of-Stake algorithm.
Context ∞ News often reports on the rapid growth of the LRT market, driven by the potential for increased staking profitability and the anticipation of airdrops from underlying protocols. Analysts discuss the complexities and risks associated with these multi-layered systems, including potential smart contract vulnerabilities. The expansion of the LRT market signifies a notable evolution in staking strategies, offering new avenues for yield generation in decentralized finance.