In a traditional bank account, account holders often earn interest on money kept in savings. This interest rate is represented as a percentage of the amount in the account, and the more money that is kept in the account and the longer it is kept, the more money an account holder stands to make.
In the world of cryptocurrencies, a similar system exists called staking. When you stake cryptocurrency, you earn rewards for holding cryptocurrency instead of trading it. Some forms of staking include proof-of-stake, delegated proof-of-stake and leased proof-of-stake.
Why Would You Not Want to Stake Cryptocurrency?
While it seems like it would make sense to stake crypto and earn rewards for doing so, investors want to be able to take action with their cryptocurrencies as markets change. If your investments are staked, they may not be available to be traded or sold quickly since staking requires an investor to hold assets. Maximize your staking potential! Explore this website for liquid staking tokens and unlock new opportunities in crypto.
Liquid staking is a new form of staking that may solve this problem. Liquid staking tokens allow investors to trade and invest with assets that are staked, something that isn’t possible under other types of cryptocurrency staking.
How Does Liquid Staking Work?
Liquid staking involves the issuance of tokenized versions of staked assets. In a nutshell, the assets remain staked, meaning they are held, but a token, or digital asset, is issued to represent the staked asset. The token is what is traded while the actual asset remains staked. When the asset is unstaked, it can be traded for the equivalent value of the token that was issued.
This process can be beneficial for investors who want to earn rewards from staking while still being able to take part in trading activities. Because cryptocurrencies function on decentralized blockchains in most cases, a record of all activities is kept on a permanent ledger, allowing investors to keep up with transactions. This also prevents fraud since no cryptocurrencies can be created out of thin air, and all records of staked assets remain on the ledger, even after tokens have been issued in their place.
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