Liquid Staking

About the Metric

Liquid staking allows users to stake their cryptocurrency through a service provider, receiving liquid staking tokens (LSTs) in return, which can be traded or used in DeFi platforms, providing liquidity even while the original assets are staked. This is different from regular staking where the asset is completely locked for the period it accrues yield and the staker has no option but to patiently wait for the staking period.

The TVL of liquid staking protocols has especially been on a rise for ETH where a solo staker has to stake a minimum of 32 ETH, a value that few can afford.

Read more on Liquid Staking

Significance

Liquid staking offers higher potential rewards (10-16% compared to 4-6% for regular staking), no minimum staking amount, and the ability to use LSTs for additional financial activities, making it more flexible and accessible.