Liquid Staking Issues & Perils

In our recent article Staking and Liquid Staking: a Primer we covered the fact that staking is rapidly becoming a substantial ecosystem of its own, including via increasing uptake from institutional investors. We explained the differences between simply staking tokens and liquid staking, which enables investors to pledge their tokens but also achieve liquidity by receiving a new token known as a liquid staking token (LST) or liquid staking derivative (LSD), which is typically deployed in decentralized finance (DeFi) to earn yield or other benefits. Sounds great, so what’s the catch? Well, in addition to the potential catches inherent in any young and relatively untested technology – crypto generally but…