LST & LRT: The Backbone of New-Age DeFi

[Chawla Solutions]

Liquid Staking Tokens (LST) and Liquid Restaking Tokens (LRT) have moved from niche experiments to the core rails of DeFi. They turn staked ETH into liquid, yield-bearing assets that can be reused across protocols, compounding returns and deepening market liquidity.

How they work
• LST: You stake ETH with a provider and receive a receipt token such as stETH or rETH that continues to earn staking rewards.
• LRT: You restake that ETH via EigenLayer and receive eETH, ezETH, or similar tokens, earning extra security fees on top of staking yield.

Why it matters
LST/LRT unlock capital efficiency: holders can borrow, LP, or farm while still accruing base rewards. They also broaden network security by directing economic weight to new services. For treasuries and sophisticated users, this enables stacked yield (staking + restaking + DeFi incentives) with transparent, on-chain accounting.

Key players
Lido and Rocket Pool dominate LST issuance; EtherFi, Renzo, and Puffer lead LRT adoption, with EigenLayer as the shared infrastructure. The result is surging TVL and integrations across money markets, DEXs, and structured-yield platforms.

Risks
Smart-contract risk, rehypothecation loops, oracle dependencies, and withdrawal liquidity are non-trivial. Users should monitor collateral ratios and diversification across issuers.

Conclusion
LST + LRT form the plumbing of the next DeFi cycle. Expect most major protocols to build “under the hood” around these assets, as staking becomes an active, composable layer for generating sustainable on-chain yield.