Glossary
Liquid Staking
Staking via a protocol that issues a tradable receipt token (an LST) representing your staked position plus accrued rewards.
Vanilla staking locks tokens and produces yield but takes the position out of circulation. Liquid staking — Lido, Rocket Pool, Frax — deposits on your behalf into validators and gives you a token (stETH, rETH, sfrxETH) that accrues the staking yield while remaining transferable and usable as collateral.
You can stake and still trade, lend, or LP, at the cost of an extra smart-contract risk layer and (in Lido's case) a high concentration of stake under a single operator set.