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 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).
Benefits of liquid staking include:
- 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: Liquid staking is a more capital-efficient solution for blockchain projects and DeFi applications, as they don’t need to compete with the native staking yield.
What can milkTIA be used for?
- DEX Liquidity : A TIA/milkTIA pool on Osmosis will be created at launch to facilitate liquid staking.
Other possible use cases:
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Lending : Collateral in lending protocols such as Mars Protocol and Umee.
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Staking derivatives: Create staking derivatives such as stakers’ baskets and leveraged staking positions
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Perpetual trading: Trade perps on platforms such as Levana and dYdX.
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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.