Every crypto trader’s ultimate goal is to profit from their assets. Staking is a good way to earn passive income from your crypto. It involves locking your funds into a crypto platform to support its operations. In return, the platform rewards you with more cryptocurrency.
However, liquid staking is a better way to put your crypto to good use. If you’re staking tokens, you’re typically locking them up. This means you can’t use them elsewhere. But liquid staking offers increased flexibility. You can have your cake and eat it, too. This means you can earn rewards without waiting to access your tokens.
Simply put, liquid staking is a better form of staking that involves delegating your coins to a validator to support a network. You earn staking rewards in return and also get a representative token that allows you to participate in other DeFi platforms.
We recently published an article on the possible risks of liquid staking. But are risks all there are to liquid staking? Definitely not! Certainly, there are risks involved in liquid staking. However, we could say the same about any crypto investment. Cryptocurrencies are volatile, meaning anything can change.
Regardless of the risks, liquid staking has lots of benefits, and that’s what we’ll consider in this article.
Flexibility
The biggest appeal of liquid staking is the flexibility it offers. In regular staking, your tokens stay locked, meaning you can’t do other things than earn rewards. With liquid staking, you receive a liquid version of the staked token. With that, you can access other DeFi opportunities, such as yield farming and lending. The best part is your rewards keep flowing.
So, if you’re interested in getting as much as you can from your tokens, then liquid staking is the way. The flexibility it offers can be a game-changer, especially for a fast-paced market like ours. You’re no longer forced to choose between earning staking rewards or taking advantage of new investment opportunities. Think of liquid staking as an extra tool helping you make the most of your earning abilities. So, you no longer have to miss opportunities because your funds are squared away.
This flexibility also means better portfolio management. There’s that freedom for those looking to diversify their strategy or want quick access to their assets for other uses. Liquid staking supports moving your investments easily without having to wait for the unstaking period. That’s good convenience.
No Unstaking Delays
One of the biggest pain points with traditional staking is the long waiting period when you want to unstake your tokens. Unstaking can take several days or even weeks. However, this depends on the platform of use. Regardless, it is often a frustrating experience, especially when in need of fast liquidity.
Liquid staking takes all that stress away. You get a liquid version of your staked tokens, giving you immediate access to your assets whenever you need them. This fast access to your funds can be a game-changer when good opportunities pop up.
Taking off the unstaking delays also makes it easier to manage your portfolio. You can easily change or adapt your strategies, making your portfolio management more dynamic and adaptable.
Diversification
Liquid staking allows you to diversify and not put all your eggs in one basket. You can take your liquid-staked token and put it in another investment. This way you hedge the risk of relying on a single platform.
Increased Yield Potential
Liquid staking is a good way to improve your yield using strategies like yield farming or liquidity mining. A user who stakes their ATOM and receives stkATOM from a service like pStake can leverage their stkATOM in other DeFi opportunities. This way, they increase their earnings from DeFi farming and staking.
Liquid staking offers a flexible way to stake your assets while still keeping access to liquidity. Liquid staking offers a win-win situation, whether it’s earning more through DeFi activities or avoiding unstaking delays. It allows you to maximize your earning potential without locking up your tokens. It’s a good option for anyone serious about getting more out of their crypto.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment and informational purposes only. Any information or strategies are thoughts and opinions relevant to accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.
We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence.
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