Liquid staking

Liquid staking lets you stake a proof-of-stake coin while keeping a tradable token that represents your staked position. It matters because normal staking locks up your coins for days or weeks, and this way you can still use that value elsewhere, like as collateral for a loan, without waiting through an unbonding period. For example, when you stake ETH through Lido, you get stETH in return; it earns staking rewards and can be swapped or deposited into DeFi protocols like Aave at any time, even though your original ETH is still locked with validators. The main risk is that the token can trade below the value of the underlying coin if too many people rush to exit at once.