Liquid Staking 101
What is Liquid Staking?
Liquid staking enables users to stake their native tokens without the need to lock them up for a specific period of time. This is accomplished by providing users with a liquid receipt token in exchange for their staked tokens. The liquid token can then be used in various DeFi applications, including lending and borrowing. When users want to withdraw their tokens instantly, they can do so by swapping the liquid token for the native token on a decentralized exchange (DEX).
What are the Benefits of Liquid Staking?
Liquidity and Flexibility
Liquid staking allows token holders to earn rewards and participate in network security while retaining the flexibility to trade or use their staked assets at any time, eliminating the need to choose between staking for APR and participating in DeFi activities.
Improved Network Security
Liquid staking encourages more token holders to stake their assets, enhancing overall blockchain network security.
Capital Efficiency
Traditional staking provides users with the opportunity to receive staking rewards for securing the underlying L1. Liquid staking allows users to continue receiving the rewards while also earning additional yield across various DeFi protocols.
What can milkTIA be used for?
milkTIA offers a wide range of use cases within the Cosmos and Ethereum ecosystem. The following examples are just a few of the potential uses, and there are many more opportunities available. Please reference Using third party apps to see where the milkTIA is currently listed on.
DEX Liquidity
milkTIA pools on Osmosis are available to earn additional yield.
Lending
Collateral in lending protocols such as Mars Protocol and UX.
Staking derivatives
Create staking derivatives such as staker’s baskets and leveraged staking positions
Perpetual trading
Trade perps on platforms such as Levana and Margined Protocol.
Payment for Blobspace and gas on Celestia with milkTIA
Chains and applications developed on Celestia will use TIA to access Celestia’s data availability by submitting transactions with PayForBlobs and as a method of payment for gas fees. Should Celestia choose to incorporate milkTIA as a means of payment for both gas and data availability, this alignment will foster improved chain security. Chains will no longer have an incentive to forgo staking to ensure TIA availability for data availability and gas transactions.
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