LSTs

Definition ∞ LSTs, or Liquid Staking Tokens, are digital assets that represent staked cryptocurrency in a proof-of-stake blockchain, providing liquidity to users whose funds are otherwise locked. These tokens allow holders to trade, lend, or use their staked capital in other decentralized finance applications while still earning staking rewards. LSTs address the capital inefficiency inherent in traditional staking mechanisms. They act as a receipt for staked funds.
Context ∞ LSTs are a prominent topic in crypto news, especially concerning Ethereum’s transition to proof-of-stake and the growth of its liquid staking derivatives market. Reports often discuss the total value locked in LST protocols and their impact on network decentralization and security. The regulatory landscape surrounding LSTs is also a frequent subject of discussion. Their utility is crucial for enhancing capital mobility within the proof-of-stake ecosystem.