The Liquid Staking Landscape of Cosmos: A Bird’s Eye View
While staking has certainly proven to be a viable means of earning rewards for PoS ecosystem participants, it comes with certain limitations. In particular, stakers are required to lock their assets within PoS protocols, limiting their ability to earn due to illiquidity, therefore forcing them to choose between staking and pursuing yield-generating opportunities in DeFi.
More PoS tokens (e.g. ATOM) utilized for DeFi activities instead of staking means fewer tokens securing the chain, which is an essential component that allows PoS networks to thrive.
Now, there’s a new and promising alternative to traditional crypto staking as we’ve known it — liquid staking. This new mechanism allows users to tokenize their staking position, providing them with additional liquid assets that can then be utilized across other DeFi products and applications. This means through liquid staking, stakers can now pursue other avenues to earn additional yield while maintaining core positions of their staked assets.
In late 2021, the TVL across liquid staking protocols was approximately $10.5 billion. Today this number stands at over $19 billion and is rising quickly as innovation continues to expand across various ecosystems.
Below we’ll explore the innovators bringing liquid staking to the Cosmos ecosystem.
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Persistence is a Tendermint-based, specialised Layer-1 network powering an ecosystem of DeFi applications focused on unlocking the liquidity of staked assets.
Persistence facilitates the issuance and deployment of liquid-staked stkASSETs, allowing users to earn staking rewards while participating in DeFi primitives, such as lending/borrowing and liquidity provisioning on DEXs.
Persistence aims to offer a seamless staking and DeFi experience for PoS (Proof-of-Stake) users and enable developers to build innovative applications around stkASSETs.