Discover Liquid Staking - A Method to Earn Profits from Cryptocurrency Assets

Main Content

• What is Liquid Staking? Differences from Traditional Staking
• Detailed Operating Process
• Practical Benefits of Participation
• Risks and Challenges to Note
• Notable Liquid Staking Projects in 2025
• Restaking - A New Step Forward in DeFi

What is Liquid Staking? Differences from Traditional Staking

In the development journey of DeFi, balancing profit and financial flexibility is always a major challenge for investors. What is Liquid Staking? It is a solution born to address that difficult problem.

In traditional staking, users must deposit cryptocurrencies like ETH, SOL( into the system to support the blockchain network. In return, they receive rewards based on the APY rate. However, assets are “frozen” during this process — you cannot freely use, trade, or reinvest them.

Liquid staking completely changes the game. Instead of letting money “sleep” in smart contracts, the protocol issues a representative token called Liquid Staking Token )LST(. This token accurately reflects the value of your staked assets, but importantly, you can use it immediately in other DeFi platforms to continue earning profits. In other words, Liquid staking allows you to “eat your rice while watching it not burn.”

Detailed Operating Process

To better understand how Liquid staking works, let’s go through each step:

Step 1 - Deposit Cryptocurrency: You choose a Liquid staking protocol )e.g., Lido, Rocket Pool( and deposit a certain amount of cryptocurrency. Common cryptocurrencies include Ethereum )ETH(, Solana )SOL(, Polkadot )DOT(, or other tokens supported by the protocol.

Step 2 - Receive a Representative Token: Immediately after depositing, you will receive a new token representing your assets. If staking ETH, you get stETH; if staking SOL, you get mSOL. These tokens are always 1:1 with the original assets, and their value will gradually increase as you earn staking rewards.

Step 3 - Use Liquidity Tokens: With this LST token, you don’t need to wait. You can immediately:

• Trade on DEXs
• Provide liquidity to pools
• Lend on lending platforms like Aave
• Participate in farming or other yield programs

Step 4 - Unstaking and Withdrawal: When you want to retrieve your original assets, you have two options: wait for a certain period )usually from a few hours to several days(, or withdraw immediately through the protocol’s liquidity pools with relatively low fees.

Practical Benefits of Participation

1. Capital Optimization: This is the biggest advantage. Your assets are no longer “dead capital” but become “living capital,” actively working across multiple DeFi platforms.

2. Multi-Stream Income: You earn staking rewards from the blockchain network and have the opportunity to seek additional profits by using LST tokens. For example, staking ETH to get stETH, then farming with stETH on Curve or Yearn to earn extra yields.

3. Maintain Liquidity: You can sell or use LST tokens anytime without waiting for unstaking periods to end. This is very important during market volatility.

4. Lower Entry Barriers: Some protocols like Rocket Pool allow you to become a validator with only 16 ETH instead of the usual 32 ETH. This helps small investors participate more easily.

5. High Flexibility: Platforms supporting Liquid staking are often deeply integrated with the DeFi ecosystem, allowing you to combine investment strategies flexibly and creatively.

Risks and Challenges to Note

Despite many advantages, Liquid staking also carries potential dangers:

1. Smart Contract Risks: Security flaws, design vulnerabilities, or attacks could cause you to lose all assets. Therefore, choose protocols that have been thoroughly audited.

2. LST Token Depreciation: In bearish market conditions )bearish(, confidence in LST tokens may decline, leading to trading below their original value.

3. Regulatory Risks: Some countries and regions are considering stricter regulations on staking and derivative products.

4. Centralization Risks: If too many validators or service providers concentrate on one or two protocols, it could create systemic vulnerabilities.

5. Technical Complexity: You need to understand the mechanisms of each protocol to avoid unnecessary mistakes.

Notable Liquid Staking Projects in 2025

) Lido Finance - The King of Liquid Staking

LDO (Lido DAO Token)

• Price: $0.63
• 24h Change: +1.77%
• Circulating Market Cap: $533.17M

Lido Finance is currently the largest Liquid staking protocol, especially dominant in the Ethereum space. This platform allows you to stake not only ETH but also SOL, DOT, and other blockchains.

When staking on Lido, you will receive stETH ###or stSOL, stDOT(, which are liquidity tokens that can immediately be used in leading DeFi protocols like Curve, Aave, Yearn to maximize yields.

Lido stands out for its user-friendly interface, deep liquidity, and extensive network support. Although there are debates about validator centralization, Lido remains the top choice for both beginners and professional investors.

) Rocket Pool - True Decentralization

RPL (Rocket Pool Token)

• Price: $2.09
• 24h Change: +0.96%
• Circulating Market Cap: $46.01M

If you support decentralization, Rocket Pool is the perfect choice. This protocol is independently designed and not focused on any single organization.

Surprisingly: you only need 16 ETH to become a validator instead of the usual 32 ETH. After staking, you receive rETH, a token that can be traded continuously and increases in value based on staking rewards.

The Rocket Pool community is very active, and the protocol is highly regarded for its security and true decentralization design.

Marinade Finance - Solana Staking Leader

MNDE (Marinade Token)

• Price: $0.05
• 24h Change: +3.83%
• Circulating Market Cap: $29.85M

On the Solana blockchain, Marinade Finance leads with its Liquid staking product mSOL. It allows you to stake SOL and receive mSOL for immediate use on DEXs like Raydium, Saber, Orca.

The staking yield on Marinade often exceeds 7%, much higher than traditional staking. The protocol is known for strong decentralization ###you can choose validator(, user-friendly interface, and excellent integration with the Solana ecosystem.

) Coinbase Wrapped Staked ETH - The “Stable” Choice

cbETH (Coinbase Wrapped Staked ETH)

This is a Liquid staking token issued by Coinbase, targeting investors seeking trustworthiness and legal compliance.

When you stake ETH on Coinbase, you receive cbETH. This token represents ownership of your staked assets and can be traded on DeFi exchanges. Although it doesn’t automatically compound yields like some tokens, cbETH is very suitable for those who want to start with a platform known for high reliability.

Ankr Staking - Multi-Chain Exclusive

ANCR (Ankr Token)

Ankr is a multi-chain Liquid staking platform supporting Ethereum, BNB Chain, Avalanche, and many other blockchains. When staking via Ankr, you receive tokens like aETH, aBNB depending on the chain.

The biggest advantage of Ankr is its highly developer-friendly infrastructure — providing API, RPC, SDKs to easily integrate staking into your dApps. The protocol is regularly audited, highly secure, ideal for developers and those wanting to stake across multiple chains.

Restaking - A New Leap in DeFi

If Liquid staking is a major step forward, then Liquid restaking is the next giant leap. This method involves reusing LST tokens to stake again in another protocol, earning two layers of rewards simultaneously.

For example: you stake ETH into Lido and receive stETH, then use stETH to stake into EigenLayer. The result is earning rewards from both the Ethereum network and EigenLayer at the same time. Platforms like EigenLayer, Renzo, AutoLayer, Pendle are leading this trend.

However, restaking also involves higher risks: complex contracts, dependence on multiple platforms, significant market risks. It is suitable only for advanced investors with experience.

Conclusion

Liquid staking has proven itself as a useful solution in the evolution of DeFi. It allows you to earn passive income without sacrificing asset liquidity.

With the strong development of platforms like Lido Finance ###LDO price $0.63(, Rocket Pool )RPL price $2.09(, Marinade Finance )MNDE price $0.05(, Ankr, and many others, 2025 promises to be an excellent time to explore what Liquid staking is and how to optimize your investment strategies.

But remember, every opportunity comes with risks. Before starting, do your own research, diversify your portfolio, and only participate in audited and reputable protocols. Your assets are your responsibility.