Definition ∞ LST Adoption refers to the increasing acceptance and integration of Liquid Staking Tokens across various decentralized finance protocols and platforms. Liquid Staking Tokens represent staked cryptocurrency, allowing holders to retain liquidity while earning staking rewards. This enables users to participate in additional DeFi activities, such as lending or borrowing, using their staked assets. Growing LST adoption indicates a maturation of staking derivatives markets.
Context ∞ LST adoption is a prominent trend in the decentralized finance sector, driven by the demand for capital efficiency among cryptocurrency holders. News often covers new integrations and the associated risks, including smart contract vulnerabilities and potential de-pegging events. Regulatory scrutiny regarding the nature and classification of LSTs is also a developing area of discussion.
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