Liquid Staking Derivatives (LSDs) represent a breakthrough in decentralized finance, especially within Proof-of-Stake ecosystems like Ethereum. As Ethereum transitioned from Proof-of-Work to Proof-of-Stake, validators replaced miners, and individuals could stake 32 ETH to earn rewards. However, this requirement poses a significant barrier for many potential investors, as their staked ETH becomes inaccessible, limiting their ability to explore other investment opportunities.
LSD tokens address these liquidity constraints by transforming staked assets into tradeable tokens. This innovation allows users to participate in various DeFi activities while still benefiting from their original staking rewards, thereby unlocking new possibilities and enhancing liquidity in the crypto space.