Liquid staking protocols

A space to discuss the ‘Liquid staking’ market sector available on Token Terminal.

What are liquid staking protocols?

Liquid staking protocols are smart contract-based protocols that allow users to participate in block validation (stake), while simultaneously getting access to their staked position in the form of a derivative token (liquid staking derivative).

What problems do liquid staking protocols aim to solve?

It’s potentially financially rewarding to participate in block validation, but there’s a high opportunity cost in locking up capital for staking.

How do liquid staking protocols solve those problems?

Liquid staking protocols give stakers access to liquidity with one function call. Liquid staking protocols delegate user deposits to professional node operators, who participate in block validation. Users receive a liquid staking derivative that represents their pro rata share of the assets staked via the protocol.

Why is now the right time to build and invest in liquid staking protocols?

Ethereum successfully transitioned to PoS. All of the most widely used L1 blockchains and appchains run on proof of stake.

What is the business model of liquid staking protocols?

The primary business model for liquids staking protocols is to generate revenue by taking a cut of the staking rewards earned by the protocol. That is, the liquid staking protocol takes a portion of the stakers’ revenue.

Where can I view the current and historical (financial) performance of liquid staking protocols?

Liquid staking dashboard: Liquid staking | Markets | Token Terminal

Methodology for liquid staking-specific metrics

Total value locked: liquidity deposited by stakers to the protocol.
Assets staked: assets staked on PoS chains by the protocol.
Fees: total staking rewards earned by the protocol.
Supply-side fees: share of staking rewards that goes to the stakers.
Revenue: share of staking rewards that goes to the protocol.
Token incentives: value of governance tokens distributed to users of the protocol.
Daily active users: daily distinct addresses making deposits to the protocol.

Example project documentation

Relevant links