Liquid Staking
Jun 26, 2023
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Introduction
Ethereum’s shift from proof-of-work to proof-of-stake enabled ETH holders to stake their tokens and help secure the blockchain network. As compensation for securing the network, stakers are rewarded with additional ETH tokens. At first, stakers were required to post 32 ETH (the minimum amount to run a node), and the user’s ETH tokens were to be locked until the Shapella upgrade was completed (successfully completed in March).
Due to the capital requirements and the illiquidity of staking ETH, a new financial primitive called a Liquid Staking Derivative (LSD) was created...