Liquid staking | Breakthrough crypto technology that combines the benefits of staking and DeFi!

Liquid staking

Staking in PoS

Proof of Stake consensus mechanism came along with an opportunity to get some extra coins for delegating your coins. While some cryptocurrencies will make you a nice bonus for holding and staking your coins, such as Cosmos (8,24%), Tezos (5,57%), or Cardano (4,95%), some others credit you just with a minimal staking reward (NEO 1,06%).

Dividends from lending dApps

You can earn quite nice dividends from lending programs such as BlockFi, Compound, Synthetix, AAVE, and others. Another opportunity to get rewarded for locking your funds is by providing liquidity to some exchange or service. By using those lending programs and liquidity providers, you can get a reward between 5% to 12% for your cryptocurrencies. You can provide liquidity to both centralized (Binance) and decentralized (Uniswap) exchanges to get rewards.

Yield farming

Yield farming hit the crypto space like a storm. Almost unlimited % of rewards came hand in hand with a high level of risk. Some farming services such as Yearn.Finance (YFI), DFI.Money (YFII), DiFyFinance (YFIII), SushiSwap, Pancake Swap, Beefy.finance, Burger Swap, and (insert any food name you want) started rewarding their users and owners by APY in dozens and even hundreds percent. But from the „yield farming hype bubble“, which occurred during summer 2020, the price of those tokens dropped significantly. So we can't say that all the users realized profit, because those, who still HODL those coins are in the significant losses, sometimes even in -90% loss. The risk was simply too high.

Liquid staking

What will a standard investor, who is maximizing his profit, do if some project like Polkadot will offer a 10% staking reward, in which you with your DOT tokens are also securing the networ[6] k. And then some liquidity provider offers 15 % for lending DOT tokens. The traditional investors will grab the higher return of 15 % whatever is the price of a less secured Polkadot network. Because just income matters, right? But is there any other solution? Better for all parties? Yes, it is. It is under development but will be released soon.

Advantages of liquid staking

Liquid staking will be such an improvement, which solves three possible opportunity costs in comparison to the traditional PoS staking reward program: an escrow, the unbonding premium, and the unbonding period.

Liquid staking, staking, DeFi and Yield farming comparison

Acala Network

Bifrost

StaFi

Ramp DeFi

Mantra DAO

Conclusion

The future of DeFi looks promising thanks to Liquid staking. For investors, liquidity providers, and finally for the network and its security.

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Polkadotters | Kusama & Polkadot validators

Polkadotters | Kusama & Polkadot validators

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Czech bloggers & community builders. We are validators of Polkadot, Kusama, Darwinia, Crab, Bifrost, HydraDX, StaFi, Centrifuge under the name: POLKADOTTERS