Liquid Staking Derivatives – Unlocking Flexibility in Proof-of-Stake Networks

Liquid Staking Derivatives (LSDs) are reshaping how users engage with Proof-of-Stake (PoS) blockchains like Ethereum and Cosmos. Traditionally, staking locks up tokens, limiting liquidity. LSDs solve this by issuing tradable tokens (e.g., stETH, rETH) that represent staked assets. These tokens continue to earn staking rewards while being usable across DeFi protocols and unlock capital efficiency, composability, and broader network participation.

Key Ideas

LSDs Unlock Liquidity for Staked Assets: Users can earn staking rewards without locking up their capital. LSDs allow staked tokens to remain productive while being used in lending, borrowing, or liquidity provision.
LSDs Are Composable, Yield-Bearing Instruments: These derivatives integrate seamlessly into DeFi, enabling users to “stack” yields—earning both staking rewards and additional returns from DeFi activities. This boosts capital productivity and opens doors for new financial strategies.

Why It Matters?

Traditional savings and fixed-income products face competition from LSDs offering higher, flexible yields. On Chiliz startups may create fan-focused staking solutions allowing users to stake fan tokens while using LSDs for ticketing, voting and exclusive access and in this way enhance engagement and utility.