What Is Liquid Staking? How It Works, Yields and Risks
Last Updated: September 16, 2026
Liquid staking lets you stake a proof-of-stake coin and receive a transferable token that keeps earning rewards. On September 15, 2026, Lido led the sector with $24.2 billion in total value locked, more than the next four protocols combined, and its stETH token paid a 7-day average APR of 2.27%, according to DefiLlama and Lido's API.
Classic staking ties coins to a validator. On Ethereum, a validator needs at least 32 ETH, and staked ETH could not be withdrawn at all until the Shapella upgrade of April 12, 2023. Liquid staking protocols pool deposits, delegate them to node operators and mint a receipt token such as stETH, rETH or JitoSOL. The token's value comes from consensus rewards, priority fees and MEV paid to validators, minus the protocol's cut. Because the token is transferable, holders can trade it in a liquidity pool, post it as collateral or use it for yield farming, and most of the extra risk comes from those second layers. A position in perpetual futures tracks the ETH price without paying any staking yield, which is why some holders use one to hedge. The table below compares five of the largest protocols by size, fees, yield and exit route.
Largest Liquid Staking Protocols Compared
| Protocol | Token and model | Size | Fees and yield | Exit route | Drawbacks |
|---|---|---|---|---|---|
| Lido | stETH rebases daily; wstETH wraps it with a fixed balance; Ethereum | $24.2B TVL; 9.69M ETH pooled on September 16 | 10% of staking rewards goes to node operators and the DAO treasury; 7-day average APR of 2.27% | Withdrawal queue that normally takes 1–5 days, and longer in Bunker mode | Holds the largest share of liquid staked ETH, and stETH is intentionally not pegged to ETH on secondary markets |
| Binance staked ETH | wBETH gains value against ETH, with the ratio updated daily; Ethereum and BNB Chain | $9.21B TVL, of which $8.68B on Ethereum | Standard fee of 10%, applied before rewards are distributed | Redemption through Binance, which sets a daily ETH redemption quota for each user | Custodial: Binance runs the staking, sets redemption quotas and fixes the ETH distribution date |
| ether.fi | eETH rebases; weETH is the non-rebasing wrapper; Ethereum | $4.66B TVL | No reward fee percentage published in its documentation | Redemption request; in the April–May 2026 wave the median wait was 4.9 days and the longest 16.7 days | Fee is not disclosed in the docs, and a small restaking position with EigenLayer is still being wound down |
| Rocket Pool | rETH gains value against ETH, with the rate updated about every 24 hours; Ethereum | $1.30B TVL | 0.05% deposit fee on the protocol route; rETH APR of 2.15% | Burn rETH for ETH when the deposit pool has enough ETH, otherwise sell it on a DEX | Direct unstaking can fail for lack of pool liquidity, and DEX exits may cost a small premium |
| Jito | JitoSOL gains value against SOL; Solana | $1.03B TVL; 10.33M SOL staked | 4% of staking and MEV rewards, plus 0.1% on direct unstaking; APY of 4.85% | Delayed unstake of up to one epoch, about 2 days, or a sale on Jupiter | Only for SOL, and rewards depend partly on MEV tips that change from day to day |
Data as of September 15, 2026. TVL: DefiLlama. Yield: Lido (7-day average), Rocket Pool and Jito. Lido pooled ETH: Lido, September 16, 2026. Fees and exits: Lido, Lido Help Center, Binance, ether.fi, Rocket Pool and Jito documentation.
How Liquid Staking Works
A liquid staking protocol sits between depositors and validators. You send ETH or SOL to its smart contracts, the protocol assigns the stake to node operators, and you receive a token that represents your claim. Rocket Pool shows how the pieces fit: a node operator bonds 4 ETH per validator, the protocol adds 28 ETH from depositors, and depositors can join with as little as 0.01 ETH. Solo staking, by contrast, still requires 32 ETH to activate a validator. Since the Pectra upgrade in May 2025, a single Ethereum validator can hold up to 2,048 ETH of effective balance, which lets large operators consolidate stakes, but the 32 ETH entry point stayed the same.
Receipt tokens come in two designs. Rebasing tokens such as stETH and eETH change your balance: Lido's documentation says stETH balances are recalculated daily when its oracle reports validator balances. Value-accruing tokens such as rETH, wBETH, JitoSOL, wstETH and weETH keep your balance fixed while their exchange rate against the staked coin rises. The difference matters in DeFi, because some smart contracts cannot track a balance that changes on its own, and in accounting, because a growing balance and a rising price may be recorded differently.
Liquid vs Traditional Staking
Traditional staking keeps things simple: your coins earn the network reward, and the main risks are validator downtime and slashing. The cost is time. To leave, you exit the validator and wait for the network to process it, and during that period the capital cannot be sold or used as collateral. The liquid model removes that lock-up for most holders. You can sell the receipt token whenever a market for it is open, or request a withdrawal through the protocol.
That flexibility is paid for in three ways. First, the protocol keeps a share of rewards: 10% at Lido, a standard 10% at Binance and 4% at Jito. Second, you add the protocol's own contracts, oracle and governance to the validator risk you already had. Third, the market price of the token can move away from its redemption value, so a quick exit on a DEX may cost more than the fee you saved. Which of these costs matters most depends on whether you plan to hold the token, sell it quickly or borrow against it.
Risks to Check Before You Stake
These six risks decide whether a staking token fits the way you use your coins.
- Smart contract and bridge risk Every deposit contract, token and withdrawal queue is code that can fail. According to ether.fi's documentation, KelpDAO's rsETH bridge was exploited on April 18, 2026 for about $292 million in unbacked rsETH, which set off a redemption wave across liquid staking tokens.
- Exit queue delays During that April wave, Ethereum's validator exit queue backed up to about nine days, according to the same documentation. Queues apply to everyone, so a protocol's normal 1–5 day estimate can stretch when many holders leave at once.
- Market discount Lido states that stETH is intentionally not pegged to ETH, so its secondary-market price can differ from its redemption value. Holders who need to sell during stress may accept a discount instead of waiting in the queue.
- Slashing Validators that sign conflicting blocks or votes are slashed. Under the Pectra rules, the initial penalty is 1/4,096 of effective balance, about 0.008 ETH for a 32 ETH validator, while correlated penalties grow when many validators are slashed at the same time.
- Custody and concentration Tokens issued by a centralized exchange depend on that company's solvency and redemption rules. Very large protocols concentrate validator power, which matters to Ethereum as a network as well as to individual holders.
- Leverage loops Some users borrow against a staking token to buy and stake more. If the token's price slips in a lending market, the loop can be liquidated even though the underlying stake is intact.
If you plan to use a staking token as collateral, read the lending market's liquidation rules and oracle source for that exact token, not just the staking protocol's documentation. Before depositing, also check the current fee, the redemption path and whether the protocol publishes audits and incident reports.
Hedging ETH Price Exposure on EVEDEX
EVEDEX does not offer staking, does not list stETH, rETH, wBETH or JitoSOL, and cannot redeem any receipt token. It is a hybrid exchange for perpetual futures: orders are matched off-chain and settled on-chain on Arbitrum, and margin is posted in USDT, so a staking token cannot serve as collateral. The honest link to this topic is hedging. A holder of 10 stETH who wants to keep the rewards but not the ETH price risk can open a short ETH-USD perpetual of similar notional value: if ETH falls, the short gains roughly what the stETH position loses, and if ETH rises, the reverse happens. The hedge has costs. Trading fees are 0.015% maker and 0.045% taker before cashback, and funding is calculated every eight hours and settled in hourly parts, so it can be paid or received. All positions share one cross-margin balance, which means a sharp ETH rally can push the short toward liquidation. A perpetual also does not protect against a stETH discount, slashing or a protocol exploit. Leverage reaches 200x only on BTC-USD, ETH-USD and SOL-USD for positions up to $50,000 notional, and a hedge sized to match a staking position does not need high leverage. Perpetual futures carry a high risk of loss.
