What Is Liquid Staking?

Liquid staking removes the opportunity cost of traditional staking. Instead of locking your ETH or SOL directly in a validator, you deposit it into a liquid staking protocol (like Lido, Jito, or Rocket Pool) and receive an LST—a derivative token that accrues staking rewards while remaining tradeable and composable across DeFi.

Why This Matters for Airdrop Farming

Liquid staking is a critical tool for airdrop farmers because it lets you stack yield while maintaining flexibility for farming opportunities. If you hold staked ETH through Lido (receiving stETH), you earn ~3.5% annual staking rewards while simultaneously using that stETH in other protocols to farm additional yields or chase airdrops. This is pure leverage—your capital works in multiple places at once.

Practical Airdrop Farming Examples

You can deposit ETH into Lido, get stETH, then use that stETH as collateral on Aave or Curve to borrow and farm yield elsewhere. During the Arbitrum airdrop, farmers who had stETH in liquidity pools on Camelot or other Arbitrum DEXs earned both LP fees, ARB rewards, and Arbitrum protocol points simultaneously. Jito has done the same on Solana—stake SOL through Jito, receive jitoSOL, then use it in Marinade or other protocols to accumulate points for a potential future airdrop.

The Strategy

Liquid staking fits into airdrop farming because it eliminates the friction of choosing between "earning staking rewards" and "farming airdrops." Your LST can be deployed across multiple protocols to maximize eligibility snapshots and point accumulation. The key is that LSTs are liquid—if a snapshot happens or a major airdrop opportunity emerges, you're not locked into staking; you can swap, move, or reposition instantly.

Risks to Know

Protocol risk exists—Lido could face smart contract vulnerabilities. LSTs can also trade at a slight discount to their underlying asset during market stress. Always check the LST's backing and redemption mechanism before farming with it at scale.