Liquid staking is a technique that enables token holders to sustain the fluidity of their staked assets by utilizing substitute tokens to garner supplementary returns through DeFi platforms. It resolves the predicaments linked with conventional staking, where assets tend to become non-liquid.

Distinction Between Delegated Staking and Liquid Staking

Within delegated proof-of-stake (DPoS), network participants choose delegates, while liquid staking aids stakers in circumventing minimum staking requisites and requirements for locked assets. DPoS entails the election of witnesses or block producers, whereas liquid staking strives to diminish barriers to entry.

Staking-as-a-Service

Staking-as-a-service acts as an intermediary between a blockchain's consensus mechanism and users seeking to engage in staking. It can be either custodial or noncustodial, affording users the capacity to entrust their assets to external parties for staking.

Operation of Liquid Staking

Staking pools enable users to consolidate their stakes via intelligent contracts, obtaining liquid tokens that reflect their respective share. This framework eradicates the necessity for a minimum staking threshold and permits holders to accrue profits from both staked and liquid tokens.

Risks Linked with Liquid Staking Platforms

Technical hazards encompass protocol vulnerabilities, while market perils involve setbacks amidst market downturns. To curtail these hazards, liquid staking platforms ought to be disclosed, audited, and incorporate bug bounty initiatives. Conducting meticulous due diligence prior to investment is imperative.