Proof-of-Work and Proof-of-Stake
There are two main ways to reach consensus. Proof-of-work, used by Bitcoin, relies on validators who run heavy calculations to add each block. This uses large amounts of energy and hardware. Most modern chains now follow proof-of-stake. Here validators lock tokens that back the honesty of every block. If a validator cheats, goes offline, or even slips up, the stake gets slashed.

How Liquid Staking Works
Liquid staking sits on top of proof-of-stake. In Ethereum or any other PoS network you can stake one token and receive an equal staked token in return. With ETH that may be stETH from Lido or a similar provider. The staked token tracks the value of the original asset yet stays transferable.

Rebasing and Non-Rebasing Models
Two models handle value growth. A rebasing token mints new units so your wallet balance climbs as rewards flow in. A non-rebasing token represents a pool share so the share price rises over time instead. The principle is the same because both capture staking rewards but show them in different ways.

DeFi Uses for Liquid Staked Tokens
Once you hold a liquid staked asset, or LST, you can move deeper into DeFi. Add it to a DEX pool so traders can swap between the LST and the base coin, which boosts liquidity. Deposit it into a lending market and borrow stablecoins. Some builders even loop the idea by buying more base coins with the loan, staking again, and repeating. That tactic amplifies yield yet also risk.

Exiting Liquid Staking
Leaving is simple. You can request an unstake, then wait the mandatory period that each chain sets, or you can trade the LST for the base asset on a DEX and walk away instantly.