Liquid Staking
A DeFi mechanism that allows users to stake their tokens and simultaneously receive a liquid derivative token representing their staked position. This derivative (e.g., stETH for staked ETH) can be freely traded, used as collateral in DeFi, or deposited in liquidity pools — solving the capital inefficiency of traditional staking where tokens are locked and illiquid.
“Staking ETH through Lido gives you stETH, which earns staking rewards while remaining usable in DeFi. You can deposit stETH as collateral on Aave to borrow stablecoins, effectively using your staked ETH productively.”
Staking
The process of locking up cryptocurrency as collateral to support blockchain network operations — specifically validating transactions and producing blocks — in exchange for rewards. Staking is the core economic mechanism of Proof of Stake blockchains. Stakers earn yield from block rewards and transaction fees but risk slashing (losing a portion of their stake) for misbehavior or extended downtime.
Restaking
A mechanism that allows already-staked assets (like staked ETH) to be used as security for additional protocols and services simultaneously, extending the economic trust of the base layer to new applications. Pioneered by EigenLayer on Ethereum, restaking lets validators opt-in to secure additional 'actively validated services' (AVSs) like oracles, bridges, and data availability layers, earning extra rewards but also accepting additional slashing risk.
DeFi (Decentralized Finance)
An ecosystem of financial services built on blockchain networks that operate without traditional intermediaries like banks, brokerages, or insurance companies. DeFi uses smart contracts to provide lending, borrowing, trading, insurance, derivatives, and yield generation in a permissionless, transparent, and composable manner. Anyone with a wallet can participate.
Proof of Stake (PoS)
A consensus mechanism where validators are selected to propose and attest to new blocks based on the amount of cryptocurrency they have staked as collateral. PoS replaces energy-intensive computational competition (PoW) with economic stake as the security mechanism — validators risk losing their staked tokens (slashing) if they act maliciously. PoS is significantly more energy-efficient than PoW and is used by Ethereum, Solana, Cardano, and most modern blockchains.