Liquid Staking Platforms: The most recent trend in the decentralized finance (DeFi) space is liquid staking derivatives. It gives you a new way to make money off of your cryptocurrency assets. LSDs are becoming more popular in the Ethereum ecosystem very quickly. It could be like Polygon and Avalanche, which are also Layer-1 networks.
What are Liquid Staking Derivatives?
Users can stake ETH with a liquid staking provider, which is why Liquid Staking was made. Because ETH is locked up, you will also get a receipt token, which is also called a “liquid staked derivative” (LSD). As a liquid token that can be fully exchanged, split, etc. But LSD is like most other crypto tokens in a lot of ways.
Since LSDs have the same value as the staked ETH that is temporarily locked, they are a way to make your staked ETH more liquid. When investors use the LSD token in DeFi activities, they can earn a return on top of the ETH they have staked. Some of these things are selling, getting cash, lending, using as collateral, etc.
What is the Shanghai Upgrade?
With the Shanghai upgrade, it is finally possible to use a withdrawal line to turn ETH that was staked back into ETH. The launch is planned for March 2023. This means that all the ETH that has been staked is doing nothing at the moment. After the Shanghai upgrade, anyone can stake and unbind, which removes one of the biggest barriers to staking ETH. This could make liquid staking platforms even more popular.
How do users put Liquid Staking Derivatives to use?
People who use LSD can make money in several ways in the DeFi market, which is growing quickly. They could, for example, put their derivative tokens on platforms for lending or use them as security to borrow assets for other market activities. LSDs are part of several DeFi lending protocols that are used in the markets for collateral. Euler Finance is one of them.
Users of this Ethereum-based non-custodial lending protocol can lend and borrow a variety of LSDs, such as Lido and Coin base’s cbETH and stETH derivatives. Recently, Euler added support for cbETH, which is an LSD token that Coinbase gives to people who stake ETH with the exchange. Before the listing, people who owned cbETH couldn’t use their collateral to back other market opportunities.
Here are the Top 5 Liquid Staking Platforms to Watch Out for in 2023
- J Pool
- Stake Wise
- Stake DAO
Rocket Pool is a Proof-of-Stake mechanism designed specifically for Ethereum 2.0. It was designed to be community-owned, decentralized, trustless, and staking-compatible. Since its inception in late 2016, ETH2 has completed over five public beta tests. Rocket Pool is designed for two primary user types. Those interested in tokenized staking can participate with as low as 0.01 ETH and rETH (opens in a new window). Others desire to stake ETH and operate a network node to earn commissions and a larger return on investment (ROI) than if they staked ETH outside of the protocol. It is among the most popular locations for wagering on liquid markets.
Lido is a liquid staking solution for Ethereum (ETH) and other Proof-of-Stake (PoS) blockchains like Solana (SOL), Polygon (MATIC), Polkadot (DOT), and Kusama (KSM). It began in the year 2020. Lido gives users 1:1 copies of their staked assets in the form of tokens. They can now sell their staked PoS tokens on an exchange. But it lets them take part in other DeFi on-chain activities that give them more rewards while they still get Lido stake rewards. In the form of asset tokens, users will get a tokenized copy of the money they deposit. But in the original deposit protocol, these can be used to get rewards. Also, other DeFi protocols and applications don’t have a central server (dApps).
3. J Pool
JPool is a stake pool on the Solana blockchain network that gives you safe, secure, and high-yield rewards for your staked SOL. The JSOL token is given to users who stake SOL through JPool to become delegators. It shows who owns the pool and grows as it collects stake rewards. With JSOL, you can also use a Defi tool to mine liquidity. Each year, delegators can earn up to 6.5–8% of the stake rewards. To get the most out of rewards and keep the network from becoming too decentralized, JPool divides the SOL staked by delegators among all validators. The concept of a “stake pool” is utilized to strengthen decentralization by providing validators with additional stakes.
4. Stake Wise
StakeWise is a service that lets anyone use the Beacon Chain’s yields. It is a liquid Ethereum 2.0 staking service. StakeWise offers the highest staking yields possible by using stable and secure institutional-grade infrastructure and innovative tokenomics. But because DeFi is a liquid staking platform, users can always un-stake their ETH capital or use it to earn higher yields. The platform fees at StakeWise are the lowest in the business. Also, you don’t have to stake a certain amount of ETH.
5. Stake DAO
Stake DAO is a platform that doesn’t hold people’s cryptocurrency and makes it easy for anyone to get more. Because it is based on decentralized blockchain protocols, it enables individuals to easily grow, track, and manage their assets from their wallets. With Stake DAO, users can boost their cryptocurrency all in one place. With credit cards and bank accounts, users can earn interest, borrow money, trade, and even buy and sell. But it’s all in one place, so you don’t have to look for and learn how to use a lot of different DeFi providers and their often confusing websites. Even trading in non-fungible tokens (NFTs) was add to the Stake DAO platform by its developers.