What is Liquid Staking?

Users can stake their native tokens without having to lock them up for a set amount of time thanks to liquid staking. This is accomplished by giving users a liquid token in return for their staked tokens. Then, the liquid token can be utilized for lending and borrowing among other DeFi applications. On a decentralized exchange (DEX), users can exchange a liquid token for a native token to instantly withdraw their tokens.

Benefits of liquid staking include:

Liquidity and Flexibility: Token holders no longer have to decide between staking for APR and taking part in DeFi activities because liquid staking gives them the freedom to trade or use their staked assets whenever they want, earn rewards, and contribute to network security.

Improved Network Security: By encouraging more token holders to stake their holdings, liquid staking raises the security of the blockchain network as a whole.

Capital Efficiency: For blockchain projects and DeFi applications, liquid staking is a more cost-efficient option because it eliminates the need to compete with the native staking yield.