Cryptocurrency staking is a fundamental process in blockchain networks utilizing Proof-of-Stake (PoS) consensus mechanisms. It involves token holders locking up their digital assets to support network operations and validate transactions. In exchange for their contribution to network security and functionality, stakers earn passive income in the form of staking rewards. This process allows crypto investors to earn yield while actively participating in the blockchain's governance and security.

What is liquid staking in DeFi?

Liquid staking is an innovative DeFi (Decentralized Finance) solution that addresses the limitations of traditional crypto staking. While conventional staking locks up tokens, making them illiquid, liquid staking protocols allow users to stake their crypto assets while maintaining liquidity. When users stake through a liquid staking platform, they receive derivative tokens, often called liquid staking tokens (LSTs), representing their staked assets. These LSTs can be freely traded or used in other DeFi applications, providing users with flexibility and additional yield-generating opportunities.

Can liquid stakers participate in crypto restaking?

Yes, liquid stakers can participate in crypto restaking. Restaking is an emerging concept in the blockchain ecosystem that allows users to leverage their staked assets or liquid staking tokens across multiple protocols or chains. This enables liquid stakers to maximize their potential crypto yields by utilizing their assets in various DeFi ecosystems simultaneously, enhancing capital efficiency. Kelp DAO Provides staking for LSTs like ETHx- LST for Stader Labs staked ETH and stETH- the LST for Lido staked ETH. 

What is the difference between liquid staking and restaking in blockchain?

While liquid staking focuses on providing liquidity to staked assets through derivative tokens called LSTs, restaking expands on this concept by allowing these tokens to be used across multiple blockchain protocols or networks. Liquid staking primarily solves the liquidity problem of traditional staking, whereas restaking aims to maximize capital efficiency in the DeFi space by enabling users to leverage their staked assets in various ways across different crypto ecosystems.Both are innovative opportunities to invest in the Ethereum blockchain, the decision whether to stake or restake is based on the investor’s risk appetite.  

Where Can Liquid Stakers / LSTs Restake in the Crypto Ecosystem?

Liquid stakers and holders of liquid staking tokens can restake their assets on various DeFi platforms and protocols. A popular option in the cryptocurrency market is Kelp DAO which increases liquidity in restaking by providing rsETH. You can easily restake scroll L2s or bridge your existing assets over Arbitrum, Optimism, Base, Linea, Scroll, ZKsync, Mode, X Layer and more.

As the DeFi ecosystem continues to evolve, more opportunities for restaking are likely to emerge, offering liquid stakers increasingly diverse ways to maximize their crypto yields and participate in multiple blockchain networks simultaneously.