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Market Analysis Of Liquidity Staking: Top 8 Liquidity Staking Protocols.
Despite being a relatively new idea, liquid staking is rapidly gaining acceptance throughout the Web3 ecosystem. For instance, the market size for liquid staking protocols is presently valued at $10.5 billion, with a market share of about 7% of all staked tokens. The total amount of Ethereum currently staked is estimated to be around 14.44 million ($19.5 billion), with an estimated 30.49% of the 14.44 million ($19.5 billion) ETH held via liquid staking on Lido Finance.
TLDR
- You may stake and spend your DeFi tokens simultaneously thanks to liquid staking.
- Liquid staking benefits PoS networks by increasing liquidity and enhancing network security.
- Lido & Marinade are the top platforms for liquid staking.
What Distinguishes Staking From Liquid Staking?
The word "staking" is unique to the cryptocurrency sector. It is the act of locking cryptocurrency assets in a system in order to get incentives. As a result, putting unused assets to work by staking cryptocurrency can be a fantastic way to generate a passive income. Staking protocols can also help with the Proof-of-Stake (PoS) consensus process, which makes it easier for networks to agree on the authenticity of blockchain transactions.
The disadvantage of staking is that you can't access your money for a while. You cannot exchange, sell, or move any assets after locking money in a staking protocol. Additionally, many staking protocols (especially PoS) have a "cool down" time or a fee for withdrawing money before the staking period has ended. Liquid staking mechanisms were developed to address some of these challenges.
What is Liquid Staking?
Liquid staking, also referred to as "soft staking," is the process of giving your tokens to a liquid staking service provider that stakes on your behalf without requiring you to give up control of your money. Liquid staking allows users to store their assets in a DeFi application and get a tokenized form of their funds, as opposed to proof-of-stake (PoS) staking which "locks" funds up in a protocol. So even when your money is being staked, you may still access it thanks to liquid staking.
For instance, Mark stakes 1000 $APT using a liquid protocol. He then receives 1000 "stAPT" (also known as "staked APT") in exchange for the corresponding amount. On the original $APT deposit that is still in the protocol, Mark will get incentives. Mark can utilize his 1000 stAPT just like he could his initial $APT. Mark may now trade, exchange, stake, or do anything else with his stAPT while still receiving benefits from the liquid staking system on his initial 1000 $APT. This includes receiving incentives on another lending platform or utilizing tokenized cash as collateral.
Mark will need to have all 1000 stAPT in order to recover his initial 1000 $APT. Based on the protocol he used, this might differ significantly because some platforms deduct the interest earned on the original deposit from the amount required to withdraw the cash.
Benefits Of Liquid Staking
Yield Farming
By liquid staking assets in one protocol, obtaining a wrapped or tokenized version of those monies, placing the tokenized funds into the next liquid staking protocol, and obtaining another tokenized asset reflecting the funds, liquid stakers profit from yield farming. Liquid Stakers can generate a yield on a variety of assets at once by effectively locking up a single asset.
Liquid Loans
Investors in cryptocurrencies are often hesitant to withdraw their assets. By utilizing a liquid staking protocol, Investors have the option of leveraging their current crypto assets to obtain a loan secured by cryptocurrencies they own. Investors can then convert their tokenized liquid funds into fiat money after liquid staking their assets.
Quick Funds Access
A further advantage of liquid staking is the ease of rapid money availability. In contrast, many proof-of-stake (PoS) protocols have strict rules for early un-staking or require a protracted un-staking procedure. In times of market turmoil or for any unforeseen payments, instant access to money might be useful.
Top Ranked Liquid Staking Protocols
- Lido Finance
Lido Finance is a liquid staking protocol that supports several blockchains including for Ethereum, Polygon, Solana, moonbeam, moonriver, terra classic and other crypto networks. Launched in December 2020,LIDO (LDO) is the highest-ranked liquid staking protocol based on total value locked (TVL) with a Total Value locked (TVL) of $7.27 Billion. With more than 4 million ETH staked, Lido controls 90.8% of the liquid staking balance for ETH2. Rocketpool, the next in line, has only liquid staked 183,040 ETH.
The liquid staked tokens through Lido are tied to the initial token. In other words, 1 ETH is equal to 1 Lido stETH (stETH). Tokens that have been staked have value and may be used as security for a variety of decentralized apps to generate a return in addition to the incentives for liquid staking.
pSTAKE is a liquid staking protocol with the highest market capitalization among Liquid Staking Protocol with a market cap of $1.86 Billion and a Total Value Locked (TVL) of $11.68m. Users of pStake receive 1:1 pegged staked representative tokens (stkTOKENs) in addition to liquid staking incentives.
pStake supports Liquid Staking on native Cosmos (ATOM), Ethereum (ETH), Persistence (XPRT), and Binance Chain (BNB) tokens, with plans to support other chains and assets (SOL, and AVAX) in the future.
Marinade Finance, the first liquid staking protocol on the Solana blockchain was officially launched in August 2021. The mission of Marinade Finance, a non-custodial liquid staking protocol, is to establish its syntax SOL, or mSOL, as the standard unit of account throughout the whole Solana ecosystem. It has more than 450 validators and a total locked value of $240.96 million. Users of Marinade Finance have the option to bypass the unstake period and receive their SOL at any moment.
By utilizing Ankr Bridge, Ankr provides its customers with a Cross-chain liquid staking experience that allows them to connect their liquid staking tokens to several blockchains for the most earning potential. Ankr is one of the most well-known liquid staking systems, with a Total Value Locked of $194.27m and over 14k validators. BSC, Ethereum, Avalanche, Fantom, Polkadot, and Kusama are all supported by Ankr.
Stader has 70,000+ liquid Stakers, a Locked Total Value of $155.65 million, and has paid out over $20,000,000+ in Liquid Staking Rewards. Hedera, Ethereum, BSC, Fantom, Near, and Terra2 are supported by Stader.
StakeWise was established in 2018 as an open-source system for Ethereum staking that is capital-efficient. With just a few clicks, users may generate yield through Eth2 liquid staking thanks to the protocol's removal of entry hurdles for users and the technical difficulty of maintaining staking infrastructure. Stakewise has a TVL of $127.59m.
Stakewise supports Ethereum and Gnosis.
Customers that stake ETH with Coinbase are eligible to obtain cbETH, an ERC20 utility token that serves as a liquid representation of their staked ETH. The TVL for Coinbase Wrapped Staked ETH is $1.25 billion.
The first genuinely decentralized Ethereum staking pool is Rocket Pool. Rocket Pool nodes only need to deposit 16 ETH per validator, as opposed to single stakers who must put 32 ETH up for deposit to create a new validator. A new ETH2 validator will be made using this together with 16 ETH from the staking pool, which stakers contributed in return for rETH.
The Total Value Locked (TVL) for Rocket Pool is $645.19 million.
Aptos $APT Liquid Staking
The Aptos network's native governance and utility token, abbreviated APT, is the primary resource for network fees and validator staking.
On October 18, 2022, $APT trading became operational on a number of cryptocurrency exchanges following the mainnet deployment. The popular new layer 1 token was initially listed on FTX, Coinbase, and Binance. On October 19, the Binance cryptocurrency exchange launched the first spot and margin trading pairings, and on October 20, at 1:00 UTC, APT withdrawals started.
The Aptos blockchain was created by a group of software engineers and blockchain specialists that had previously worked on Meta's Diem stablecoin project. The chain employs the low latency Byzantine Fault Tolerant (BFT) consensus technique, the Move virtual machine (MoveVM), and the Move language for dApp creation.
The Proof-of-Stake (PoS) chain is a strong choice for services that demand high throughput, including non-fungible tokens (NFTs) and decentralized finance (DeFi) initiatives, thanks to the highly scalable blockchain's ability to reach up to 160,000 TPS.
For $APT holders, several staking protocols are currently beginning to offer Liquid Staking options.
On October 19, 2022, the Aptos-based liquid staking protocol Ditto Finance enabled users to stake $APT to generate $stAPT.
Tortuga Finance is a non-custodial liquid staking system on Aptos Network. Tortuga is one of the first protocols to provide validators access to APT liquid staking. With Tortuga, $APT holders can liquid stake APT, and get tAPT to utilize throughout the ecosystem. Holders of $tAPT can also stake in order to increase their chances of receiving the Tortuga Finance airdrop while also earning a decent dividend.
Closing Thoughts:
Liquid staking chances for $APT token holders will grow in the near future, thus it won't be surprising if Pontem Network, the top product development studio on Aptos, develops products that give $APT users liquidity staking options.
Pontem is dedicated to creating and sustaining the Aptos developer environment and is establishing the tone for the Aptos ecosystem. To speed up dApp development on Aptos,Pontem has created an explosive resource architecture that aids developers in avoiding mistakes like duplicate spending or reentrance that are typically made while developing smart contracts.
For more information, visit Pontem site.
