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A Beginner’s Guide to Liquid Staking: How to Unlock its Potential

Hey there, my crypto-curious friend. Wondering what all the buzz about liquid staking is? I mean, we have been seeing and talking about it all over the timeline. Let’s break it down in simple terms.

What’s Liquid Staking?

Imagine you could earn rewards from your cryptocurrency without locking it away. That’s liquid staking for you! Instead of tying up your tokens, you stake them and still have access to their value.

How Does it Work?

You lock up your crypto in a special place that supports staking. This helps secure the blockchain and earns you rewards. In return, you get a cool thing called a liquid staking token (LST). It’s like a voucher for your staked tokens. You can use it in DeFi or trade it while still earning rewards. Examples are Swell (swETH) and Renzo (ezETH). While Eigenlayer is the daddy of Liquid Staking and Restaking pools.

Example Time!

Let’s say you stake your Ethereum using Lido Finance. Boom! You get stETH (staked ETH) in return. You can use stETH in different DeFi apps and keep earning rewards. Lido’s super popular for this stuff, leading the pack in total value locked!

Centralized vs. Decentralized

If you’re into convenience, centralized platforms like Bybit and Binance got your back. But, watch out for risks like them going bust or messing up.

Decentralized options, like Lido Finance and Rocket Pool, cut out the middleman. You keep control of your assets, but it needs some web3 know-how.

Airdrops, Airdrops, Airdrops

And now we get to the juice part of the meat, the airdrops. Liquid staking and restaking has opened up many doors for airdrop farmers. People stake an asset like Ethereum, and then get a LST in return, they stake that as well. On top of it a lot of these routes got Eigenlayer points, so farmers ended up farming 2-3-4 airdrops in go go.

Some even started borrowing against their LST, to loop airdrop routes.

Here are a few airdrops you can check out for Liquid staking opportunities.

Watch Out for…

Smart contract risks: Sometimes, these contracts can have hiccups. Keep an eye out for bugs!

Less control: When you stake, you might give up some say in how things are run.

And that’s liquid staking in a nutshell! Dive in, but keep an eye out for those risks. Happy staking!

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You might also like our recent Guides on Runes or Wormhole (staking)

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