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Liquid Staking Tokens (LSTs) are a type of staking tokens that stake on Babylon on behalf of token holders. They are intermediaries that enable individuals to participate in staking while maintaining liquidity.
When one stakes Bitcoin directly with Babylon, the Bitcoin is locked for a period. However, liquid staking protocols offer a solution to this by providing a liquid token that represents your staked Bitcoin. Offering great flexibility and ease of use.
They will deal with:
- Managing staking transactions
- Performing delegation selection
- Handling reward distribution
- Maintaining the proper ratio between staked BTC and LSTs
However, it's important to understand that when using liquid staking protocols:
- The holder is not directly participating in Babylon staking
- The protocol manages the holder's stake and receives the points/rewards
- The holder is trusting the liquid staking protocol with their Bitcoin
See a list of liquid staking tokens (LSTs) protocols at BTC Staking Tools page.