TL;DR
Liquid staking lets you stake SOL and receive a liquid token (LST) in return that earns staking rewards while remaining usable in DeFi for lending, LP, or collateral.
When you stake SOL normally, it’s locked with a validator and you can’t use it until you unstake (which takes 2-3 days). Liquid staking protocols accept your SOL, stake it across validators, and give you a receipt token (like mSOL, jitoSOL, or bSOL). This token represents your staked SOL plus accruing rewards. You can trade, lend, or LP with the LST while still earning ~7-8% staking APY.
Marinade (mSOL) is the largest, delegating across 400+ validators for decentralization. Jito (jitoSOL) adds MEV rewards on top of staking yield by running Jito-Solana validators. Blaze (bSOL) focuses on underprivileged validators. Each LST accrues value differently — some increase in price relative to SOL (mSOL), others distribute rewards separately. The exchange rate between an LST and SOL gradually increases as rewards accumulate.
LSTs unlock “double-dipping”: earn staking yield AND DeFi yield simultaneously. Deposit jitoSOL as collateral on Kamino to borrow USDC (staking yield continues while you use the borrowed funds). Provide mSOL/SOL liquidity on Orca for minimal impermanent loss plus LP fees plus staking rewards. LSTs are the foundation of Solana’s DeFi composability.