Liquid staking has emerged as a powerful DeFi innovation, offering crypto holders an alternative way to earn rewards while maintaining the flexibility to use their staked assets across various protocols.
Persistence, a layer-1 blockchain focused on DeFi and staking solutions, provides an ecosystem for liquid staking that benefits both individual investors and institutional players. Persistence’s liquid staking platform, pSTAKE, allows users to stake their assets while receiving a liquid staking token (stkToken) that they can use in DeFi protocols to earn additional rewards.
Here’s an in-depth guide to how Persistence’s liquid staking works and how it can be leveraged to maximize yield.
Understanding Liquid Staking
Traditional staking involves locking up assets in a staking contract, which helps secure the network and provides returns in the form of staking rewards. However, this approach has its drawbacks, as it limits the staker’s liquidity by locking up the staked funds. Liquid staking addresses this by issuing a derivative token that represents the staked asset’s value. This token, known as a liquid staking token, can be freely used in various DeFi activities while still earning staking rewards.
Persistence’s platform, pSTAKE, is specifically designed to enable liquid staking. By staking through pSTAKE, users receive liquid tokens that they can reinvest, trade, or utilize in other DeFi ecosystems, effectively allowing them to earn yield on both their staked assets and the staking derivatives.
How Persistence’s Liquid Staking Works
- Stake Assets on pSTAKE: Users start by staking their assets, such as XPRT (the native token of Persistence), ATOM, or ETH, through pSTAKE. This staking activity helps secure the network and entitles users to staking rewards, similar to traditional staking.
- Receive Liquid Staking Tokens: After staking, users receive corresponding liquid staking tokens (stkXPRT, stkATOM, etc.) in a 1:1 ratio. These tokens represent the user’s staked assets and are pegged to the underlying asset’s value.
- Earn Dual Rewards: By holding the stkTokens, users continue to earn the staking rewards generated by the underlying staked assets. Additionally, users can utilize stkTokens across various DeFi protocols to earn further yield, such as lending, liquidity provision, or yield farming. This allows for “double-yield” opportunities without needing to unstake the original assets.
- Redeem Assets: If users wish to unstake, they can redeem their stkTokens back into the original staked asset. There is often an unbonding period associated with this process, which may vary depending on the network’s rules.
Benefits of Liquid Staking with Persistence
- Increased Liquidity: With liquid staking, users don’t have to choose between earning staking rewards and maintaining liquidity. Liquid tokens can be used across multiple DeFi applications while still accruing staking rewards, offering a highly efficient way to use capital.
- Higher Yield Potential: Since liquid staking tokens can be reinvested, users can participate in additional DeFi activities such as lending, borrowing, and farming. This increases the potential for higher returns compared to traditional staking alone.
- Flexibility and Interoperability: Persistence’s stkTokens are interoperable with other blockchains and DeFi protocols, allowing users to use their assets across a range of ecosystems. This flexibility makes it easier to find and take advantage of the best yield opportunities.
- Secure and Reliable: Persistence’s platform is built on the Cosmos SDK, a secure and scalable infrastructure. pSTAKE, the liquid staking app, is audited and continuously monitored to ensure user funds are safeguarded, providing peace of mind for stakers.
Getting Started with Liquid Staking on Persistence
To start liquid staking on Persistence’s pSTAKE:
- Set Up a Wallet: Make sure you have a compatible wallet like Keplr or MetaMask and ensure your wallet is connected to the Cosmos ecosystem.
- Access pSTAKE: Visit the pSTAKE platform and connect your wallet. From here, you can select the asset you want to stake, such as XPRT or ATOM, and follow the on-screen prompts to begin staking.
- Receive stkTokens and Deploy in DeFi: After staking, you will receive the corresponding stkTokens in your wallet. You can now explore DeFi opportunities to maximize your rewards by deploying these tokens across other platforms.
Final Thoughts
Persistence’s liquid staking offers a powerful way to stake assets while retaining the flexibility to participate in DeFi. By providing liquid staking tokens, Persistence enables users to benefit from staking rewards and additional DeFi opportunities, maximizing returns without sacrificing liquidity. For those looking to diversify and optimize their crypto holdings, Persistence’s pSTAKE is a comprehensive solution that blends the best of staking and DeFi for higher yield and flexibility.