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Staking is critical in securing blockchain networks while earning rewards for investing in crypto assets.
In traditional finance, people lock up their savings in financial institutions such as banks to earn interest. In the crypto market, staking refers to locking up your crypto assets in decentralized finance (DeFi) protocols to earn rewards. Staking has become a popular way of earning passive income in crypto as locked-up tokens help secure the blockchain networks.
In the early stages of crypto staking, one could only earn through the staked tokens. With liquid staking, a flexibility feature is included. One can stake a token like Ethereum and get a liquid version like stETH, which can be traded and used for other purposes on the DeFi ecosystem.
This is like locking your savings and getting a receipt to use for other reasons, and later redeeming the receipt for your savings.
Why is Liquid Staking Important?
Liquid staking is an innovation that unlocks more asset utility without sacrificing one’s potential rewards, especially for long-term token holders. Staking will earn investors passive income, while liquid staking gives both yield and freedom to risk some of your staked assets for more potential gains without withdrawing them.
Platforms such as Lido, Rocket Pool, and Coinbase offer liquid staking services for crypto assets like Ethereum and Solana. This game-changer service allows one to maximize on their crypto utility and returns.
