Liquid staking emerges as a game-changer for crypto investors — Interview with Ankr
Liquid staking is rapidly gaining attention in the crypto industry as a way to incentivize participation in proof-of-stake (PoS) networks and provide a robust price stability mechanism. However, its benefits go beyond these functions. In this interview, Filipe Gonçalves, chief of DeFi at Ankr, shared his insights on the benefits of liquid staking, new developments in the space, and how using staking rewards as a base layer for DeFi could lead to a new era of possibilities for the crypto industry.
Q: What is liquid staking, and how does it solve the problem of locked-up liquidity in proof-of-stake networks?
Liquid staking was originally created to provide immediate liquidity for staked Ether (ETH) that couldn’t be unstaked indefinitely, thus incentivizing participation in Ethereum 2.0. However, as liquid staking expanded to other proof-of-stake networks, its narrative changed to provide a robust price stability mechanism due to its elastic supply. This opens up opportunities for arbitrageurs and enables DeFi composability for proof-of-stake networks, leading to a multiplier effect on the sector’s total value locked (TVL). Moreover, liquid staking allows other DeFi protocols to add yield on top of proof-of-stake rewards, which can only be accessed through liquid staking.
Q: How does liquid staking compare to other DeFi protocols and tools, such as lending and borrowing platforms or automated market makers?
The magic of liquid staking is that staking rewards are no longer in competition with DeFi yields. With liquid staking, stakers can receive a base layer of staking rewards — the biggest source of yield in crypto — while using their liquid staking tokens on DeFi protocols. They can then lend, borrow and yield farm as much
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