The popularity of liquid staking is growing fast. The topic has seen somewhat of a resurgence in light of Ethereum’s Shapella upgrade. The long-awaited ETH liquidity benefits liquid staking providers, with users now able to leverage underlying staked ETH. But which platforms are safe and secure choices, and which offer the highest yields? If you’re keen you participate in liquid staking, here are the top seven high-yield platforms with the BeInCrypto seal of approval.
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What is liquid staking?
Simply put, liquid staking is a way to stake a cryptocurrency by creating an equivalent token that you do not have to “lock up.” They are sort of like futures or options contracts, without deadlines.
In proof of stake (PoS) blockchains, users stake their coins by locking them in a smart contract. Subsequently, the protocol chooses who will validate blocks based on who has staked their coins.
In previous years, many blockchain protocols did not allow you to move these coins or tokens while they were staked. They are effectually locked in the protocol. The advent of liquid staking platforms created a way to hold an equivalent of the staked crypto, which means that your funds no longer have to sit idle.
8 best liquid staking platforms in 2024
PancakeSwap
PancakeSwap is a popular decentralized exchange (DEX) on the BNB Chain, the latter of which was created and is maintained by the Binance team. It is a fork of Uniswap V2, the most popular DEX on Ethereum. The latest version of PancakeSwap supports liquid staking for ETH and BNB.
As of August 2024, PancakeSwap allows liquid staking for ETH and BNB. ETH liquid staking involves depositing ETH on Binance to receive BETH. This token is then wrapped into wBETH on the BNB chain. LSD rewards are paid in wBETH and can be converted. On the other hand, BNB is delegated to SynClub to stake. Rewards are paid in SnBNB. SynClub takes a10% commission, the rest is distributed to SnBNB holders.
ETH: 3-5%
BNB: 0.5-3%
Lido Finance
Lido Finance is a liquid staking platform. It relieves users of the burden of running their own nodes. However, users can run their own nodes as well. Nodes operators are added to the protocol via the DAO.
- DAO adds node operators
- Open-source
- High fee
- Smart contract risk
Rocketpool
Rocketpool is an Ethereum based staking platform. It allows users to stake with less than 32 ETH. This allows users to run nodes themselves, what Lido calls “Minipools.”
Users do not have to stake with Rocketpool directly. As long as you hold rETH, you are staking. To continue, you only need 8 or 16 ETH to create a Minipool.
7.08%
- Decentralized
- Minipools
- Has a DAO
- Smart contract risk
Benqi
Benqi is built on the Avalanche blockchain. It is a liquid staking platform, but also allows you to supply, borrow, and earn crypto. It is an algorithmic liquidity market.
Stakeholders can deploy a fully operational node and begin validating subnets with as little as 25 AVAX and 197.5 AVAX in QI collateral, thanks to BENQI Ignite. This enables users to earn P-Chain validating rewards without running a full node or locking up AVAX on a validating node.
Up to 7.2%
- Decentralized
- Borrowing and lending
- Open-source
- Smart contract risk
Marinade Finance
Marinade Finance is a Solana-based non-custodial liquid staking protocol. Marinade allows you to stake your SOL tokens using automated staking strategies and receive tokens (mSOL). You can then use these tokens in DApps.
In addition to Marinade Finance’s staking platform, it also offers NFTs. Marinade NFTs allow holders to gain access to MarinadeDAO and exclusive channels, as well as participate in DAO governance. MNDE is the governance token, and it can be obtained from any of the Solana decentralized exchanges.
6.64%
- Non-custodial
- NFTs
- Multi-signature
- Smart contract risk
Parallel DeFi Super App
Parallel DeFi Super App is a multichain application on Polkadot and Kusama. It is a money market protocol. DeFi Super App is the creation of Parallel Finance, a capital market company.
Parallel DeFi Super App is a borrowing and lending market. Users can also stake and receive sDOT or sKSM. You can then take the LSD tokens and use them in the Money Market Protocol on the Parallel DApp.
Yields are variable, and can be as high as up to 20%
- Multiple DeFi services
- High yields
- Counterparty risk
- Smart contract risk
Stakewise
Leading node operators built and run StakeWise Pool, a non-custodial network of validators, on behalf of stakers using ETH deposited into the Pool. StakeWise utilizes institutional-grade infrastructure along with special tokenomics to give its users the highest staking yields possible.
Deposits and rewards received by those staking in the Pool are tokenized by StakeWise. It creates sETH2 (staking ETH) and rETH2 (reward ETH), which are 1:1 representations of users’ deposits and rewards. You will receive rETH2 to your address as a reward for staking as long as you hold the sETH2 that represents your deposit. Stakewise has a DAO, and SWISE is its governance token.
4.23%
- Pooled staking
- Multiple protocol native tokens to speculate on
- Counterparty risk
- High fees
StaFi
Stafi is a one-stop shop for staking services. The platforms exists on multiple blockchains including Cosmos (its native chain), Ethereum, BNB, Kusama, Polkadot, Solana, and Polygon.
The foundation of StaFi’s entire ecosystem is rTokens (such as rETH), which make liquid staking possible. Stake your tokens to get rTokens in return. The app also offers a DEX, pools for liquidity mining, and a bridge.
-ATOM: 23.17%
-KSM: 16.63%
-DOT: 17.23%
-SOL: 6.11%
-ETH 5.50%
-MATIC: 4.00%
-BNB 3.83%
- Audited by Peckshield
- Multichain support
- Counterparty risk
- Smart contract risk
What are the advantages of liquid staking?
The most obvious advantage of liquid staking is that it offers a way for stakers to use their tokens while earning staking rewards. Some blockchains have un-bonding periods. Validators may have to wait up to a month before they can withdraw their staked crypto, depending on the protocol.
With liquid staking, you can keep your crypto staked. Instead of going through a lengthy un-bonding period, you can take your LSD and use it how you please.
Another advantage of liquid staking is the ability to arbitrage. Arbitrage is the simultaneous purchase and sale of cryptocurrencies in different markets or derivative forms in order to profit from price differences for the same asset.
For example, the par value of ETH is $2,000. Let’s say that there is an LSD equivalent of ETH called sETH (i.e., staked ETH). sETH trades for $1,800 on a liquid staking protocol. You can trade one sETH for one ETH and make a $200 profit.
Let’s go even further. Holding sETH allows you to claim the rewards associated with staking ETH on the Ethereum blockchain. Instead of staking directly, you can purchase an LSD for the opportunity to claim staking rewards (typically in the form of more LSD).
Perhaps the most interesting advantage of liquid staking is the ability to earn yield through DeFi strategies. You can take your LSD and lend or stake it to earn a yield on other platforms.
In summary, the advantages of liquid staking are:
- Arbitrage
- Yield farming
- Earn staking rewards
- “Unlock” your crypto
What are the disadvantages of liquid staking?
While liquid staking platforms may come off as a panacea, they do have some risks. The largest one is counterparty risk. Instead of running a node yourself, you stake your crypto with a liquid staking platform.
In turn, they run the nodes for you in your stead. Therefore, you must rely on the platform to have near-perfect uptime, avoid attestation penalties, and avoid slashings altogether.
In the event that the platform does not perform, you could potentially lose your stake. This leads to the next point. You must rely on the platform to payout earnings.
Are LSD platforms the future?
Liquid staking platforms provide a unique niche in the marketplace. They function similarly to traditional derivatives and allow holders to speculate and gain exposure to the underlying asset they are derived from.
However, the practice is young and may present a contagion risk. Many platforms are springing up, offering LSD, accepting them as collateral, and borrowing and lending them.
If the underlying asset collapses, the LSD tokens collapse. Imagine what happens when these types of tokens are used to prop up the price of other assets. On a more positive note, that risk is reduced as long as you are simply staking.
Frequently asked questions
The best liquid staking protocols are non-custodial and decentralized. This eliminates or reduces counterparty risk. On Ethereum, the best platform is Lido Finance.
The best staking platform depends on whether your are staking for a blockchain, or a smart contract protocol or decentralized application. Blockchain staking is typically the safest. On Ethereum, the best staking platform is Lido Finance.
A liquid staking service allows you to stake a coin or token, and in return gives you liquid staking derivatives (LSD). A LSD is like a traditional derivative. They function similar to wrapped or liquidity provider tokens.
Stader Labs is a multichain liquid-staking solution provider in decentralized finance. It is compatible with six different blockchain networks. Users can deposit tokens into liquid staking contracts through Stader Labs.
Liquid staking presents a certain amount of risk. Users must rely on platforms to payout rewards, validators to be profitable, and smart contracts to be safe. In general, staking is much safer liquid staking.
Cosmos probably has the highest APY, out of all high market cap proof-of-stake coins. You can stake ATOM for an APY over 23%. Many low cap blockchains offer staking rewards over 100% APY.
Platforms like Stakewise, Lido, Miranade Finance, and Benqi provide competitive staking rewards across various cryptocurrencies. These platforms leverage innovative mechanisms to optimize staking rewards, attracting users seeking lucrative opportunities in the crypto space.
Staking ETH for Ethereum 2.0 is attractive primarily due to the potential annual percentage rate (APR), ranging from 6% to 15%. By investing in Ether and meeting the minimum requirement of 32 ETH, individuals could anticipate earning approximately 2 to 5 ETH annually based on current prices. This staking opportunity provides a passive income stream for Ethereum holders while actively participating in the network’s transition to a proof-of-stake consensus mechanism.
It motivates users to provide liquidity in decentralized finance (DeFi) protocols, thereby improving the efficiency and functionality of these platforms. By enticing active participation, yield farming enables users to earn extra tokens or rewards for contributing assets to the DeFi ecosystem. Moreover, it plays a pivotal role in attracting additional liquidity to DeFi projects, contributing to creating a decentralized financial environment while providing investors with opportunities to generate passive income through diverse strategies.
Staking entails securing a specific quantity of cryptocurrency in a wallet to contribute to the functioning of a blockchain network and receive rewards, frequently in the form of extra tokens. In contrast, liquid staking permits users to stake their assets while maintaining the flexibility to trade or transfer the staked tokens more freely. Tokens associated with liquid staking, like staked variants of native assets, serve as tradable and transferable representations of staked assets, enhancing liquidity and facilitating their utilization in different DeFi protocols.
Acquiring liquid staking tokens is convenient through centralized and decentralized exchanges (CEX or DEX), providing flexibility unmatched by traditional staking methods. Maximizing Returns: Through the strategic utilization of staking rewards, there exists the opportunity to achieve noteworthy returns, ranging from 6% to 8%.
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