How do Stride’s liquid staked tokens work?

A liquid staked token (LST) is a receipt token that represents a staked token. The receipt token may be redeemed for an ever-growing number of the underlying token

For example, stATOM represents staked ATOM. When a user deposits ATOM with Stride, Stride stakes the ATOM and issues stATOM to the user. Unlike ATOM, stATOM automatically earns staking rewards. At any time, stATOM may be used to redeem the underlying ATOM.

Stride LSTs are non-rebasing. This means that Stride LSTs constantly appreciate in value against the underlying staked token.

For example, every day the amount of ATOM that can be redeemed by 1 stATOM increases. This is due to accumulating staking rewards. If we assume that 1 stATOM = 1 ATOM on day 1, and the ATOM staking APR is a consistent 15%, 1 stATOM will be worth 1.15 ATOM after 1 year. Every day this redemption rate increases, such that 1 stATOM is gradually worth more ATOM. Rewards can be redeemed by unstaking the LST or by trading it on an exchange.