Liquid staking benefits the crypto ecosystem overall — here are 3 reasons why

Proof of Stake (PoS) blockchain is waiting for you to bet crypto. However, the participation of staking is small — Only 24% Of the total market capitalization of the staking platform, it is locked to staking — which means crypto enthusiasts have not yet realized its benefits.

While PoS blockchain is improving the capabilities of the crypto ecosystem, liquid staking will ultimately increase adoption. Liquid staking not only provides the ability to bet crypto for verification rewards, but also allows owners to continue to use locked assets for investment in other activities and yields. Liquid staking also solves some of the biggest hesitations crypto owners have to bet on.

If you’re thinking of betting or frustrating during the lockup period and looking for a solution, here are three benefits that liquid staking brings to the crypto world.

What is Liquid Staking?

The innovation of staking is to transform blockchain functionality.As an alternative to the high energy usage and highly competitive nature of Proof of Work (PoW) blockchains, PoS blockchains enable better energy efficiency — estimated 99.95% reduction Increased energy usage — Increased flexibility in the hardware used and faster transactions. Instead of competing with other miners, the crypto owner only bets a portion of the crypto for the chance of being selected as a verifier and winning the relevant award. As blockchain moved to PoS, staking lowered barriers to entry for many crypto enthusiasts.

However, staking does not completely eliminate the barrier. One of the main reasons crypto holders are reluctant to bet is because of the lockup period. According to the latest report,Staking conditionMany people who haven’t bet yet, or who won’t bet again in the future, pointed out the same hesitation. They don’t want to lock their assets into bets, not when they can be used elsewhere.

How do you get crypto owners to bet while allowing them to continue using their assets? Liquid Staking provides a solution to crypto steakers by providing derived tokens that can be used in other yielding activities such as DeFi. Not only is this a way to leverage the best of both worlds, but it is also an innovation that could ultimately shift the adoption of common staking.

Three benefits of liquid staking

Liquid staking has many advantages as it solves the biggest hesitation that crypto enthusiasts get from joining staking. The asset cannot be used during the lockup period. But that’s not the only benefit it offers. Here are three ways Liquid Staking can improve the entire crypto ecosystem:

Advantage 1: Yield can be accumulated

One of the benefits of liquid staking is that you can earn yields while earning yield stacking or staking rewards. This will continue to be available on DeFi, but the systemic risk of yield stacking on DeFi is a major concern. If the base layer protocol fails, the entire stack can collapse, resulting in significant losses. However, in liquid staking, the basic yield comes from the PoS network itself. This means that users can rely on the base yield from the PoS network, whether they are building up yields or if a DeFi project fails. The odds of a reliable PoS Layer 1 failing are much lower than the odds of a DeFi project running a run on illiquidity.

In fact, the more PoS stackers you have, the less likely you are to have a network failure. Therefore, liquid staking not only helps PoS security, but also helps users get a reliable yield from the network itself.

Advantage 2: Ease of use

The staking process is a bit tedious for the average user unless they have undergone a replacement. However, even if the user invests through the exchange, the exchange itself has a considerable amount of capital and investment on the network, leading to centralization of investment. This also creates additional risk for the stakes, as the entire capital is at risk if the exchange is faced with an attack.

Another way is to bet independently. However, the main problem with staking independently is the time and effort required to do so. You also have the minimum technical knowledge required to understand the validator and select the one with the longest uptime and no slash history. In particular, it needs to be investigated and understood by the user.

In liquid staking, the protocol has various parameters for selecting validators. In addition, we want to maintain the liquidity provided by our users, so it is the protocol’s responsibility to choose a reliable validator with no slash history and the longest uptime. This makes the user’s staking journey much easier.

Advantage 3: Network security

In PoS networks, the ability to validate transactions on the blockchain comes from the amount of capital available in the validator wallet, the amount the verifier will bet on, and how long that capital is held. Therefore, the strength of a PoS network is directly proportional to the number of validators and the amount of capital bet in the network. When betting restrictions such as lockup periods are removed, more users may be motivated to bet capital. As the number of validators on the network increases, so does the amount of capital bet, and as the amount of capital bet increases, the network becomes even more powerful.

Make liquid staking accessible

Liquid staking doesn’t just provide a convenient way for crypto owners to keep using their assets during lockup. Liquid staking provides the ability to get more returns in an easier way than traditional staking. It also helps strengthen the entire blockchain network as well as increase adoption by providing easier options for users to bet. Start betting today — the growth of the crypto industry depends on it.