The Hub team at Informal Systems contributed the following description of Cosmos SDK Liquid Stake Module:

The Cosmos SDK branch used by the Cosmos Hub includes extensions that enable liquid staking. While implemented as changes to existing modules, these additional features are hereinafter referred to as the liquid staking module (LSM). In a nutshell, LSM enables the creation of a semi-fungible liquid staking primitive, i.e., LSM shares. LSM shares are derivatives of the delegation shares. They are tied to a delegator and a validator pair and they represent the underlying delegation shares. By issuing LSM shares, the underlying staked ATOM can become "liquid" while still being slashable. The LSM shares are tokens that can be used in various DeFi protocols and transferred between users or between chains via IBC. LSM shares are not fungible (as they are tied to a delegator/validator pair) and are issued by the Hub directly and thus don't depend on the security of any entity other than the Cosmos Hub itself.

Zellic conducted a security assessment for The Hub team at Informal Systems from November 12th to November 20th, 2024. During this engagement, Zellic reviewed Cosmos SDK Liquid Stake Module's code for security vulnerabilities, design issues, and general weaknesses in security posture.