Liquid Staking
Staking through a service that issues a tradable token representing your staked position, so the position remains usable elsewhere.
A holder deposits the native asset with a staking protocol, which runs or selects validators and issues a receipt token in return. The receipt either rebases, so the balance grows, or accrues value against the underlying through a rising exchange rate. Because the receipt is an ordinary transferable token, it can be traded, lent, or posted as collateral while the underlying stays bonded. The risks stack: the staking contract can fail, the underlying validators can be slashed, and the receipt can trade below the underlying when withdrawal queues are long, since the link is maintained by redemption and arbitrage rather than a guarantee. Concentration is a network-level concern when one provider controls a large share of total stake.
In practice
A liquid staking token used as collateral in a lending market represents a bonded position that cannot be withdrawn instantly, which is why lending markets apply their own discount to it.
The common misunderstanding
A liquid staking token is a claim on staked assets rather than the assets themselves, and it can trade below the underlying when redemptions are slow or the provider is in doubt.