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What is a Liquid Stake Unit (LSU) and Native Liquid Staking?

What is a Liquid Stake Unit (LSU) and Native Liquid Staking?

A Liquid Stake Unit (LSU) token is a native asset minted by the Radix Protocol’s native validator component and given to users who stake XRD to a validator. 

An LSU represents a claim on the underlying pool of staked XRD (the “staked pool”) within a validator component, in proportion to how much XRD was staked by the user at the time. This means that each validator mints its own unique LSU token specifically for its pool. See How does staking work on Radix for more. 

LSUs are freely transferable and can be swapped with other assets in Radix’s DeFi ecosystem. Radix therefore provides native liquid staking, and does not require liquid staking to be provided by third parties at the application level, as with Ethereum and Lido. It is protocol-level and trustless.

LSUs can be returned to their relevant validator component via a special unstake request transaction. The LSUs then get burnt, and the correct proportion of the XRD held in the staked pool for that validator component is then put into a special “unstaking pool”, and a claim NFT is minted and given to the user.

After a period of time as defined by the Radix Network, that XRD in the unstaking pool will then become unlocked and if the claim ticket NFT is returned by the user, the underlying XRD can be claimed.

While displaying similar resource behaviors to Pool Units, there are also a few differences therefore an LSU is not technically a Pool Unit.

Further Reading: