Best 5 Liquid Staking Platforms To Watch In 2023; Here’s Top List
- By Coingape Staff
- Updated on March 18, 2023
Liquid Staking Platforms: Liquid staking derivatives are the most recent trend in the decentralized finance (DeFi) space. It provides a new way to earn a return on your crypto assets. LSDs are rapidly gaining traction in the Ethereum ecosystem. It may follow in the footsteps of other Layer-1 networks such as Polygon and Avalanche.
What are Liquid Staking Derivatives?
Liquid Staking was developed to allow users to stake ETH with a liquid staking provider. Also, receive a receipt token, also known as a “liquid staked derivative,” due to the lockup nature of ETH (LSD). As a liquid token that is fully fungible, transferable, fractional, etc. However, LSD is comparable to the majority of other crypto tokens.
Since LSDs have a value similar to the underlying staked ETH that is momentarily locked, they essentially unlock the liquidity of your staked ETH. Investors can earn an additional yield on top of their staked ETH by using the LSD token in DeFi activities. These activities can be selling, providing liquidity, lending, using it as collateral, etc.
What is the Shanghai Upgrade?
The Shanghai upgrade finally makes it possible to withdraw staked ETH back to ETH using a withdrawal line. The planned launch date is March 2023. This implies that all the staked ETH is currently sitting around doing nothing. Since anyone can stake and unbound after the Shanghai upgrade, which eliminates one of the biggest barriers to staking ETH, liquid staking may become even more popular.
How do users put Liquid Staking Derivatives to use?
LSD users can take advantage of a variety of yield opportunities in the quickly expanding DeFi market. They could deposit their derivative tokens on lending platforms, for instance, or use them as collateral to borrow assets for additional market activities. The markets for collateral have LSDs integrated into a number of DeFi lending protocols. They include Euler Finance.
Users of this Ethereum-based non-custodial lending protocol can lend and borrow a variety of LSDs, including the derivatives cbETH and stETH that are made possible by Lido and Coinbase. Recently, Euler expanded its support to include cbETH, the LSD token that Coinbase issues to ETH stakers who decide to stake with the exchange. Holders of cbETH were unable to use their collateral to support other market opportunities before the listing.
Here are the Top 5 Liquid Staking Platforms to Keep an Eye on in 2023
- J Pool
- Stake Wise
- Stake DAO
Rocket Pool is a ground breaking Proof-of-Stake protocol for Ethereum 2.0 that was created to be community-owned, decentralized, trustless, and compatible with staking. Since its inception in late 2016, ETH2 has gone through more than five successful public beta tests. Rocket Pool is designed to serve two main user groups. Those who want to participate in tokenized staking using rETH (opens new window) with as little as 0.01 ETH. Others, want to stake ETH and run a node in the network to help generate a higher ROI than staking outside of the protocol due to commissions earned. It is one of the most popular liquid staking platforms.
Lido is a liquid staking solution for Ethereum (ETH) and other Proof-of-Stake (PoS) blockchains, such as Solana (SOL), Polygon (MATIC), Polkadot (DOT), and Kusama (KSM). It was founded in 2020. Users receive 1:1 tokenized copies of staked assets from Lido. They now have access to liquidity for their staked PoS tokens. However, it enables them to take part in other DeFi on-chain activities for added yields while still earning staking rewards on Lido. Users will get a tokenized copy of their deposited funds in the form of stAsset tokens. However, these can be used to earn rewards in the original deposit protocol. Also, other DeFi protocols and decentralized applications (dApps).
3. J Pool
JPool is a stake pool that offers safe, secure, high-yield rewards on your staked SOL on the Solana blockchain network. The JSOL token, which represents users’ ownership in the pool and increases as it accumulates stake rewards, is given to users who stake SOL via JPool to become delegators. A Defi instrument for mining liquidity can also be used with JSOL. Up to 6.5–8% of staking rewards can be earned by delegators each year. To maximize rewards and preserve network decentralization, JPool shares SOL staked by delegators among all validators. The stake pool concept is employed to strengthen decentralization by increasing stake distribution among validators.
4. Stake Wise
StakeWise is a liquid Ethereum 2.0 staking service that enables anybody to take advantage of the yields offered by the Beacon Chain. StakeWise offers the highest staking yields possible by utilizing stable and secure institutional-grade infrastructure along with innovative tokenomics. However, because DeFi is a liquid staking platform, users can un-stake or use their staked ETH capital to earn higher yields at any time. StakeWise has the lowest platform fees in the industry. Also, it does not require a minimum amount of ETH to be staked.
5. Stake DAO
Stake DAO is a non-custodial platform that makes it simple for anyone to expand their cryptocurrency holdings. It offers a seamless way for people to grow, track, and control assets directly from their wallets because it is built on top of decentralized blockchain protocols. With Stake DAO, users can boost their cryptocurrency in one place. Users can access interest earning, borrowing, trading, and even buying and selling with credit cards and bank accounts. However, all in one place, as opposed to searching for and learning how to use countless DeFi providers and their frequently unintuitive websites. The platform’s developers for Stake DAO even succeeded in integrating non-fungible token (NFT) trading.
Liquid Staking FAQs:
- How is liquid staking different from Crypto staking?
Liquid staking, or soft staking, is a more advanced variant of classic staking available on several new-generation intelligent contract protocols. Users can use their locked cash for other crypto-based activities using liquid staking and continue to receive rewards from their first deposit.
- What are some of the main functionalities of a liquid staking product?
Your finances are flexible and liquid thanks to liquid staking. For example, users might add cryptocurrency to a smart contract using a third-party application. In exchange, you receive a derivative or wrapped token, along with an issued, tokenized version of your funds. This coin represents your original asset.
- Is there any risk involved in liquid staking?
The risk involved with liquid staking is that it opens the door to centralization. Liquidity pools with access to multiple staked tokens can delegate the tokens to various stakers. If the pool grows large enough, it may eventually seize control of the blockchain and centralize its management.
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