Learn · Ethereum staking
Liquid staking: claims, market prices and exits
A liquid staking token makes a staking claim transferable. It does not make the underlying ETH instantly withdrawable, or remove the possibility of loss.
A synthetic Ethereum liquid-staking pool, not a live protocol quote. No wallet, live rates or real funds. Start with native staking for validator duties and penalties.
01 · from deposit to claim
The token represents exposure to a pool
A pool combines deposits and delegates validator operation. A depositor receives a token representing a claim tied to pooled assets. This can provide access below the solo-validator minimum and a transferable position, while the pool earns staking rewards and pays operator or protocol fees.
Our fictional pool issues 10 fixed shares for 10 ETH. Net asset value (NAV) per share is underlying ETH divided by outstanding shares. Rewards after fees raise it; underlying losses lower it. A real token may instead rebase its token balance. Lido’s stETH and wstETH illustrate those different representations; this model reproduces neither contract.
02 · reward, loss and liquidity together
A claim and a sale price are different numbers
Settle the normal period, then compare selling with redemption. Stress leaves the underlying claim intact after rewards and fees, but introduces a market discount and thinner liquidity. The loss event also reduces the underlying claim itself. Both can occur together.
Illustrative model · no live rates
One claim, two ways out
Choose a scenario, then step through it. Each scenario resets the timeline. All rates, losses, prices and waiting steps here are fictional.
Model inputs: 10 ETH, 10 shares, 4% gross annual rate for 90 days, 10% fee on rewards; loss 0% of principal. Market discount 0%; pool depth 1000 shares. Stress/loss discounts apply after the period settles.
Compare exit routes (changing route rewinds any exit steps)
Step 1 · In wallet
Start with 10 ETH. Nothing is staked yet.
Wallet: 10.0000 ETH
Held shares: 0 · queued claim: 0.0000 ETH
Waiting steps are schematic, not a countdown. This model freezes balances during exit; real rewards, penalties and settlement amounts can differ during the waiting process.
| Component | ETH |
|---|---|
| Starting ETH | 10.0000 |
| Gross staking reward | 0.0000 |
| Reward fee | -0.0000 |
| Underlying loss | -0.0000 |
| Underlying ETH claim | 10.0000 |
| Market discount on whole position | -0.0000 |
| Additional sale price impact | -0.0990 |
| ETH from market sale | 9.9010 |
Redeem underlying claim, after waiting
10.0000 ETH
Per share: 1.0000 ETH. Model assumes no further loss during queue.
Sell all shares at model market depth
9.9010 ETH
Spot: 1.0000 ETH/share. Sale moves the pool price; no swap fee in this illustration.
Selected outcome: queued redemption · illustrative outcome, not yet received
+0.0000 ETH versus holding
Net value $20,000 · change from starting dollars $0 · difference from holding the original ETH at the same final price $0.
The sale uses a fictional constant-product pool: ETH received = ETH reserve × shares sold ÷ (share reserve + shares sold). A smaller reserve means your order moves the price further. The discount changes the starting price; price impact is the additional cost of selling this quantity. These costs are shown separately.
03 · choose what you give up
Selling trades price for immediacy; redemption requires a process
A market sale transfers the token to a buyer or trading pool. You receive what that market can pay for your order, subject to execution. Protocol redemption follows its withdrawal rules: a request may need liquidity, validator exits, finalisation and a later claim transaction. A queue position is not spendable ETH.
The lab holds the claim constant while waiting to isolate this distinction. Real withdrawals can settle for less after losses, and rewards during the queue depend on protocol rules. For example, Lido’s withdrawal queue separates request, finalisation and claim; queued requests do not continue earning staking rewards.
Convenience adds another set of dependencies
The upside is pooled access, delegated operation and a transferable claim that can be used elsewhere. In exchange, holders depend on validator operators, contracts, accounting reports and governance. Underlying slashing or penalties can pass through; a contract failure is a separate risk that the numerical model does not simulate.
Using the token as collateral adds borrowing and liquidation risk. A market discount can matter to a lender even when the underlying stake remains intact. This lesson omits leverage, transaction costs, swap fees, taxes and protocol-specific protections. Neither a quoted yield nor the word “liquid” guarantees your exit value.