❓FAQs

For more, visit the ETH Liquid Staking FAQ documentation

🔐 Protocol Security

How is the protocol secured?

  • Enterprise-grade, non-custodial infrastructure from leading node operators

  • Multiple third-party audits (Halborn, Spearbit)

  • DAO-governed with strong community participation

  • Industry-leading tech partnerships

Is the protocol audited?

Yes. All mainnet features are audited by Halborn or Spearbit. See full details on the security page.

Where is staked ETH custodied?

ETH is held in the Ethereum deposit contract. Liquid Collective is non-custodial.

Why isn’t ETH deposited to the consensus layer immediately?

Deposits are first held in the River smart contract's Deposit Buffer. ETH is committed to the consensus layer based on Oracle reports (average delay ~24 hours, but depends on demand and redemptions).

What is the slashing coverage program?

A 3-tiered protection model for LsETH holders:

  1. Nexus Mutual coverage

  2. Slashing Coverage Treasury

  3. Node Operator commitment More on coverage

Does the protocol use a multisig?

Yes. A multi-signature wallet with ecosystem participants governs the protocol. This will transition to more programmable, onchain execution over time.

Where are validator keys held?

  • Withdrawal keys: Set to the protocol smart contract (immutable)

  • Validator keys: Submitted by node operators, who retain private key ownership

⚙️ Protocol Operation

How many node operators does Liquid Collective use?

The protocol launched with top-tier operators like Figment, Coinbase Cloud, Blockdaemon, and Staked. The operator set is expected to grow over time.

What is the protocol service fee?

A 10% fee on network rewards, distributed to:

  • Node Operators

  • Platforms, wallets, custodians

  • Slashing Coverage Treasury

  • Liquid Collective DAO Paid in LsTokens (e.g., LsETH).

How is stake distributed?

Staked ETH is allocated across node operators using a round-robin mechanism for diversity and decentralization.

Does Liquid Collective support MEV Boost?

Yes, if it is secure and commercially reasonable. Execution-layer rewards (e.g., MEV) are automatically staked, boosting overall protocol rewards.

Are withdrawals supported?

Yes. LsETH redemptions were enabled in June 2023 following Ethereum’s Shapella upgrade. More on redemptions

💠 Tokens

What can you do with LsETH?

LsETH is a fully composable ERC-20 token. You can:

  • Hold and earn rewards

  • Trade or exchange it

  • Use it in DeFi protocols

What’s Liquid Collective’s DeFi strategy?

To make LsTokens the industry standard for liquid staking — integrated broadly across DeFi and Web3 ecosystems.

Will there be a governance token?

Yes. A token is planned to support decentralized protocol governance by industry participants.

What’s the difference between cToken and aToken models?

  • cToken (used by LsETH): Fixed supply; value grows over time with rewards.

  • aToken: Supply rebases to reflect accrued rewards.

cTokens (ERC-20) offer better composability and adoption in DeFi.

What is the protocol conversion rate?

The conversion rate reflects the total ETH (principal + rewards – penalties/fees) per LsETH. It increases over time and is not fixed 1:1.

Are ETH staking rewards automatically staked?

Yes. Rewards (both consensus and execution layer) are pulled into the River contract and automatically added to the protocol’s deposit queue.

What are the tax implications?

Market views (not tax advice):

  • Minting LsETH may not trigger a taxable event (as it represents ownership, not an exchange).

  • cToken reward accrual may not be taxable until redeemed.

Always consult a tax advisor for your specific jurisdiction.

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