Liquid Staking Tokens Explained

A liquid staking token (LST) is a tradable receipt for ETH (or another asset) that someone has staked on your behalf. You deposit ETH into a protocol like Lido or Rocket Pool, and out comes stETH or rETH — a token that grows in value as the underlying ETH earns staking rewards. The receipt is liquid: you can trade it, lend it, or use it as collateral. Read the general liquid staking explainer first if this is new to you.

The two reward models

LSTs grow your balance in one of two ways. Knowing which is which makes the rest of the article click:

• Rebasing — your token count goes up. Hold 1 stETH today, hold 1.04 stETH a year later. Lido's stETH is the most famous example. Simple to read; can confuse some wallets and DeFi protocols.
• Value-accruing — your token count stays the same, but each unit is worth more underlying ETH. Hold 1 rETH today, hold 1 rETH a year later — but that 1 rETH redeems for 1.04 ETH. Cleaner for DeFi composability.

The major Ethereum LSTs

• stETH (Lido) — rebasing. Largest by far, ~30% of all staked ETH. Deepest liquidity. Strong governance concerns about market share.
• rETH (Rocket Pool) — value-accruing. Smaller, more decentralised validator set. Slightly lower yield because the protocol takes a higher cut.
• cbETH (Coinbase Wrapped Staked ETH) — value-accruing. Backed by Coinbase's institutional staking infrastructure. Safer regulatory profile for US users; concentrated counterparty risk.
• wstETH — wrapped stETH. The non-rebasing version of stETH, designed for DeFi protocols that don't handle rebasing tokens cleanly. Same exposure, different mechanics.
• frxETH/sfrxETH (Frax) — two-token model. frxETH is your liquid receipt; staking it gives you sfrxETH which earns the rewards. Higher yield because non-stakers subsidise stakers.

Beyond Ethereum

Liquid staking exists on most major chains, just less mature:

• Solana — mSOL (Marinade), bSOL (BlazeStake), jitoSOL (Jito). Jito's MEV-boosted yield often leads.
• Cosmos / ATOM — stATOM (Stride). Smaller market, higher protocol risk.
• Avalanche — sAVAX (Benqi). Modest TVL.
• Polygon — stMATIC. Mid-sized.

How to choose between LSTs

Three factors actually matter:

1. Liquidity. If you might need to exit fast, stETH wins on every chain — its market is 10–50x deeper than alternatives.
2. Net yield. Differences between LSTs are usually 0.1–0.3%. Marginal unless you're at huge size.
3. Counterparty / decentralisation profile. Lido has scale. Rocket Pool has decentralisation. Coinbase has regulatory clarity. Frax has the highest yield. Pick the one whose trade-off you're comfortable with.