Liquid staking

Liquid staking lets you participate in DeFi while earning staking yields.

Liquid staking solves the Staking Dilemma by giving you the best of both worlds – it lets you secure the network and use your SOL at the same time.

You can think of staking as putting gold in a vault, and liquid staking as issuing a piece of paper money (an IOU, "I owe you") for the gold in that vault. In the same way that a paper IOU can be redeemed at any time for the gold, a liquid staking token (LST) can be redeemed at any time for staked SOL.

Unlike natively-staked SOL, this liquid staking token is transferable. It can be used in all of DeFi – borrow-lend, perps, stablecoin issuance, etc.

Better UX than native staking

Liquid staking is also an improvement on user experience (UX) from native staking. Think how involved the process of native staking and unstaking is. First you have to navigate to the staking tab in your wallet and find your preferred validator. Then you have to "activate" your stake and wait two days. Everytime you want to stake more, you have to wait another two days. Even if it's with the same validator, stake accounts with the same validator don't automatically combine, so now your wallet is littered with many stake accounts and you have to "merge" them one by one. Unstaking is even worse. If you want to sell half of your stake, you need to first "split" your stake account into two. Then you have to deactivate your stake, and finally remember to claim it two days later.

All of this results in an incredibly obtuse UX when staking your SOL natively. We've lost count of the number of times we've seen people ask, "I've unstaked my SOL, where is it?"

Yet, despite these benefits of liquid staking, we think liquid staking is still incomplete.