What is Liquid Staking What are the Benefits of DeFi Without Lockup Period for users
What is Liquid Staking What are the Benefits of DeFi Without Lockup Period for users
Liquid staking offers crypto investors the opportunity to stake their assets and use them in the DeFi (Decentralized Finance) ecosystem. This system occurs by “wrapping” staked tokens and issuing wrapped tokens to users in exchange for collateral. Wrapped tokens can be transferred and used to generate passive returns. Liquid staking allows users to stake their assets and withdraw them at any time without incurring a lock-up period. This enables higher capital efficiency and increased liquidity in Proof-of-Stake (PoS) blockchain networks.
Advantages Provided by Liquid Staking,
Capital Efficiency
Liquid staking allows more transactions with the same capital across DeFi protocols and blockchain networks. Every dollar locked in traditional staking remains a dollar unusable within the DeFi protocol. With liquid staking, locked assets contribute more to the economy by increasing liquidity. This leads to faster growth of blockchain ecosystems.
Generating Passive Returns
Liquid staking offers the opportunity to earn passive returns on your assets. For example, if a blockchain provides a certain rate of staking returns, you can earn extra returns by using liquid staking. This is a lucrative situation for both staking investors and blockchain networks.
Flexibility
When you lock up your assets in traditional staking, it can become difficult to access those assets. Liquid staking, on the other hand, offers instant access. This feature is especially important during periods of high price volatility. So you can access your assets whenever you want.
Aspects to Consider in the Liquid Staking Transaction,
Smart Contract Risk
Liquid staking occurs by wrapping staked tokens. This potentially means a new smart contract interaction and could increase smart contract risk. However, these risks can often be reduced with appropriate security measures.
Differences Between Collateral Value and Token Value,
Sometimes there may be differences between the value of the staked asset and the wrapped token. This may occur especially in volatile market conditions. However, such price fluctuations are usually temporary and may return to the equilibrium price once the market stabilizes.
On Which Platforms Can Liquid Staking Be Done?
ETH Staking and stETH Token
Users who want to stake on the Ethereum network obtain staked tokens by depositing their ETH tokens into the staking contract. These tokens are then updated with rewards and provide liquidity. For example, those who stake on the Lido platform receive the stETH token and can use this token in DeFi transactions.
Additional earnings can be obtained by using staked tokens in liquidity pools. Users can earn rewards by placing staked tokens in liquidity pools. In this way, rewards are received from staked assets and liquidity is provided.
Lido: Unlimited ETH Staking Opportunity,
The Lido platform offers unlimited ETH staking on the Ethereum network. Users receive the stETH token when staking. They can use this token for DeFi transactions and also earn rewards from liquidity pools.
Rocket Pool: Diversified Liquidity,
Rocket Pool is also one of the leading platforms providing liquid staking in Ethereum. Staking can be done using the Rocket Pool ETH (RETH) token and this token can be used in the DeFi ecosystem.
Liquid Staking on BNB Chain,
BNB Chain offers liquid staking through three different web3 protocols such as Ankr, Stader and pStake. Staking BNB is represented by transferable and collateralizable tokens.
Marinade in Solana: High Returns with MSOL,
The Solana ecosystem offers liquid staking through the Marinade (MNDE) protocol. The staked SOL is returned to the user as MSOL token. The MSOL value increases over time by trading at a low premium.
The value of MSOL gradually increases with each cycle. This allows users to receive more SOLs over time. Other liquid staking options within the Solana ecosystem include Socean (SCNSOL) and Raydium.
Liquid Staking on Phantom,
Fantom (FTM) manages validator pools using Liquid Proof of Staking (PoLS). PoLS offers a system where even wallets with low savings can participate in staking. By locking FTM tokens, users contribute to the liquidity of the network and earn rewards.
Validator pools stake liquid tokens and earn Staking Rewards (S-Rewards). S-Reward is determined based on stake size and validator performance. In this way, the security of the network is supported and the rewards for users are increased.
Those who do liquid staking on Fantom receive the sFTM token in return for the FTM they stake. The sFTM token can be used for various purposes within the Fantom ecosystem. It is also used to produce synthetic assets within the Fantom DeFi Suite.
Users can also create Fantom USD (FUSD) and use it as collateral or trade synthetic assets. Although FUSD is traded as a stablecoin, it offers lower-cost transactions than other options.
Liquid Staking on Cosmos,
With the Cosmos 2.0 upgrade, native liquid staking has been enabled on the Cosmos network. Now users can stake ATOM tokens and earn returns locally while staking.
Native liquid staking increases integration into the Cosmos ecosystem, allowing users to stake more efficiently and locally. In this way, network security is supported and users earn more rewards.
These new opportunities, which are constantly evolving and changing in the crypto world, indicate great potential for crypto investors. Liquid staking on different platforms such as Ethereum, BNB Chain, Solana, Fantom and Cosmos allows you to invest your crypto assets more effectively and profitably.
