A liquid staking token, or LST, represents a claim or share associated with assets committed through a liquid staking arrangement. It can circulate while the underlying assets participate in proof-of-stake validation. Holding the token does not mean that its owner personally runs a validator.
What a token unit represents
The accounting model determines how staking results reach holders. A rebasing token can change its balance, while a token with a variable conversion rate changes how much underlying value each unit represents. Lido’s stETH and wstETH illustrate these approaches. Rewards, fees and penalties affect the accounting; one LST does not universally equal one unit of the underlying asset.
An LST also differs from a protocol’s governance token. For example, LDO provides governance participation rather than representing the same staked-ETH position as stETH.
Market price and redemption
An LST’s quoted trading price can differ from its protocol accounting value. Selling depends on market liquidity, whereas redeeming through a protocol can involve withdrawal queues and other conditions. Transferability therefore does not guarantee immediate access to the underlying stake.
Using an LST as loan collateral adds liquidation risk. Validator performance, contract bugs, oracle failures and governance changes also remain relevant. The receipt token changes how a position can be used; it does not remove the risks of the underlying staking arrangement.