LRT Explained (Liquid Restaking Tokens)
Liquid Restaking Tokens (LRTs) wrap restaked deposits into tradable receipt tokens, letting users trade or use capital in DeFi while the underlying assets remain locked.
How an LRT works
The LRT Token Lifecycle
1. User Deposit: Depositor sends ETH or LSTs (like stETH) to the LRT protocol vault.
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2. Mint Receipt: The protocol mints a transferable receipt token (such as eETH, ezETH, or rsETH).
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3. Capital Delegation: The protocol deposits funds into restaking middleware and delegates to an operator set.
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4. Rewards and Penalties: Service fees increase the receipt value; any slashing event burns pool principal and depresses token value.
Token accounting models
- Reward-bearing (cToken model): Your token balance stays constant, but the redemption rate against the underlying asset increases over time as fees accrue (e.g., 1 LRT = 1.04 ETH).
- Rebasing (stETH model): The exchange rate stays 1:1, but the token quantity in your wallet increases periodically as rewards are credited.
The abstraction trade-off
LRTs hide operational complexity by automating operator selection and fee compounding. In exchange, depositors take on manager key risk, pooled counterparty risk, and additional smart contract layers.
This page is explanatory and not a recommendation.