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The Collateral Question DeFi Has Been Too Polite To Ask For a sector that prides itself on transparency, decentralized finance has been remarkably evasive about one of the more uncomfortable truths of the last cycle: not every liquid staking token deserves to sit on a lending market's collateral list.
The industry treats stETH, rETH, cbETH, frxETH, and the newer wave of liquid restaking tokens as if they were interchangeable claims on the same underlying asset.
Each carries its own redemption logic, operator concentration, oracle exposure, and slashing geometry, and pretending otherwise has cost depositors real money during every stress event of the past two years.
The premise of an LST is straightforward enough. A user stakes ETH, receives a derivative token, and goes about composing yield strategies on top of it.
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