Given the benefits of liquid staking, it is unsurprising to find that it has been adopted by major blockchains as follows:
(a) Ethereum and Polygon
With Nethermind running its validators as part of the Lido Node Operators Sub-group, Lido had in January 2023 dethroned Maker DAO as the largest DeFi protocol thanks to its "innovative staking solution, which allows users to access liquid Ether staking without committing to the traditional 32 ETH minimum." In recent times, the prospects of Lido have been boosted by Ethereum's Shanghai upgrade which is slated to take place sometime in March 2023.
In tandem with Ethereum’s upcoming Shangai upgrade, Lido is set to roll out staking reward withdrawals and improved staking architecture that would allow Lido Staked ETH (stETH) holders to withdraw funds from Lido at a 1:1 ratio in ETH. According to research by Nethermind, when Lido's staking reward withdrawals are introduced, 10% of validators would choose to exit with the average withdrawal time being 16 days. The resulting selling pressure on stETH would render it more advantageous for validators to sell their stETH into ETH and join the activation queue, resulting in stETH trading at a discount against the ETH upon the activation of withdrawals on Lido’s liquid staking platform.
Besides Ethereum, Lido has been deployed on the Polygon network too. Lido on Polygon allows users to stake their MATIC tokens to earn rewards while using their wrapped MATIC in the form of stMATIC in the secondary market. As of February 2023, stMATIC has a market cap of about USD83 million.
Other than Lido, another liquid staking platform which has been deployed on both Ethereum and Polygon is Ankr which allows users to stake MATIC tokens to earn rewards by staking these tokens in return for Ankr Staked ETH (ankrETH) and_Ankr Staked MATIC (ankrMATIC). Both these wrapped tokens are reward-bearing tokens that provide instant liquidity through their connection with DeFi platforms with ankrETH being connected with Uniswap (v2 and v3), Bakeryswap and Sushiswap whereas ankrMATIC is connected with Uniswap (Polygon), Quickswap and Dystopia.
(b) Binance
Binance has ventured into the liquid staking domain by offering such services through the web3 protocols of Ankr, Stader and pStake. The liquid staking framework of BNB Chain is such that the original cryptocurrencies i.e. Binance Coins (BNBs) would be wrapped in the form of aBNBc (Ankr), BNBx (Stader) and stkBNB (pStake) which can be used within the BNB ecosystem while the staked BNBs earn staking rewards. Similar to other liquid staking arrangements, the staked BNBs can be unstaked anytime by unwrapping the wrapped tokens of aBNBc, BNBx and stkBNB to convert them back to BNBs.
(c) Solana
The Solana ecosystem also has a host of liquid staking platforms notably Marinade (mSOL) and Socean (SCNSOL). These platforms operate in a manner not unlike other liquidity platforms whereby using Solanas (SOLs) as the original cryptocurrencies, the wrapped tokens would take the form of mSOL and SCNSOL which can be used within the Solana's ecosystem while the staked SOLs earn staking rewards.
Liquid staking allows users to have their crypto cake and eat it too by capitalizing on the best of custodial and non-custodial staking. On one hand users can maximize their rewards through the element of double yield generation whereas on the other hand the pertinent risks are balanced through the flexibility of unstaking at any time, thanks to the absence of any lock-up period. Liquid staking's element of double yield generation renders it to be the functional representation of the value generation promise of DeFi, whereas the unparalleled flexibility of liquid staking renders it to be the conceptual embodiment of the user autonomy ideals of DeFi. Long story short, liquid staking is the perfect epitome of DeFi.
