LRTs

Definition ∞ LRTs, or Liquid Restaking Tokens, are digital assets that represent staked cryptocurrency within a restaking protocol, allowing users to maintain liquidity while participating in network security. These tokens enable holders to access additional yield opportunities by restaking their already staked assets across multiple protocols. LRTs facilitate capital efficiency for participants in proof-of-stake networks. They abstract the complexities of direct restaking.
Context ∞ LRTs are a relatively new and rapidly growing sector within decentralized finance, often featured in news concerning Ethereum’s liquid staking ecosystem and yield generation strategies. Discussions around LRTs frequently center on their utility in enhancing capital efficiency and their associated risks, such as smart contract vulnerabilities or slashing penalties. The emergence of LRTs signifies the continuous innovation in how users participate in blockchain security and earn rewards. Their development impacts the broader DeFi landscape.