When you stake Ethereum, the native cryptocurrency of the Ethereum blockchain that powers smart contracts and decentralized applications. Also known as ETH, it’s the backbone of most DeFi protocols, you lock your coins to help secure the network and earn rewards. But what if you could earn those rewards and still use your ETH to trade, lend, or invest elsewhere? That’s where liquid staking, a method that turns staked ETH into a tradable token representing your stake and rewards comes in. It’s not magic—it’s blockchain engineering solving a real problem: the lack of liquidity in staking.
Liquid staking works by letting you deposit your ETH into a smart contract, which then stakes it on your behalf. In return, you get a token—like stETH from Lido or rETH from Rocket Pool—that represents your staked ETH plus the rewards it’s earning. You can send this token to a DEX, use it as collateral in a lending protocol, or even trade it like any other asset. This breaks the old rule that staking meant your money sat idle. Now, your ETH works harder. And because these tokens are backed by real staking activity, they trade close to 1:1 with ETH, making them reliable for DeFi use. This is why platforms like Deribit and Crypto.com now support stETH as collateral for options and futures—it’s not just a gimmick, it’s a functional asset.
But it’s not risk-free. If the staking provider gets slashed for misbehavior, your token’s value can drop. Some protocols have insurance or multi-sig governance to reduce this, but you still need to pick wisely. And while liquid staking tokens are liquid, they’re not always as simple as holding ETH. Their value can fluctuate slightly against ETH due to market demand, staking yield changes, or protocol updates. That’s why traders and DeFi users keep an eye on metrics like the ETH/stETH premium or the redemption queue length. If you’re holding ETH long-term and want to earn yield without giving up flexibility, liquid staking is one of the smartest moves in crypto right now. Below, you’ll find real-world breakdowns of how people use it, what goes wrong, and which platforms actually deliver on their promises.
Stader ETHx (ETHX) is a liquid staking token that lets you earn Ethereum staking rewards while keeping your ETH usable in DeFi. Learn how it works, how it compares to stETH, and whether it's right for you.