LsETH, or Liquid Staked ETH, is a token generated when Ethereum (ETH) is staked through Liquid Collective’s liquid staking protocol. It serves as a receipt token for staked ETH, representing ownership of the staked ETH and any accrued network rewards, minus fees or penalties. LsETH is based on the Ethereum ERC-20 token model, and the conversion rate of LsETH fluctuates to reflect the value of accrued rewards and penalties. This allows stakers to maintain liquidity and utilise their staked assets in decentralised finance.
Why is there a need for a liquid staking standard?
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Opportunity cost
Traditional staking methods involve significant tradeoffs, as stakers must consider the opportunity cost of locking up their tokens to stake on a given network. -
Institutional and Enterprise Needs
Current decentralised liquid staking offerings fail to meet the needs of institutions and enterprises due to a lack of transparency around validator counterparties. Simultaneously, centralised liquid staking offerings are non-interoperable and contribute to market fragmentation.
How does the Liquid Collective solve this need?
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Liquidity
Traditional staking is subject to bonding and unbonding periods (ranging from days to weeks). Liquid staking (depositing ETH and receiving LsETH) allows you to maintain liquidity while earning staking rewards. -
Capital Efficiency
Use LsETH as collateral or to participate in CeFi or DeFi. -
Diversity
Liquid Collective aims to provide a decentralised approach to enterprise-grade liquid staking, ensuring the highest level of security and compliance while promoting standardisation and composability.