Introduction
Before we get into a list of the top liquid staking tokens of 2023, let us first understand what liquid staking really is. Liquid staking is a means of locking up users’ tokens and contributing to the security of a proof-of-stake (PoS) blockchain network. This is essentially a means by which retails players can put their relatively smaller crypto holdings to use by locking them up on a liquid staking pool to earn some passive income.
Traditional method of staking a typically subject to period of bonding and unbonding, which can range from days to weeks – liquid staking provides stakers with increased liquidity and also capital efficiency at the same time. This is facilitated by means of providing holders who are contributing their tokens to a staking platform to receive another token as a receipt for evidence of their ownership of their staked amount of a particular token.
With that out of the way, let’s jump into talking about the top liquid staking cryptos that you should be aware of!
Coins |
Market Cap |
Price |
ATH |
TVL |
|
Lido DAO (LDO) |
$1.87 billion | $2.26 | $10.56 | $7.85 billion |
|
Frax Shares (FXS) |
$724 million |
$9.8 |
$207.3 |
$1.07 billion |
|
Rocket Pool (RPL) |
$377 million |
$36.6 |
$60.3 |
$874 million |
|
Ankr (ANKR) |
$259 million |
$0.02 |
$0.22 |
$153 million |
| StaFi (FIS) | $26 million | $0.44 | $2.8 |
$27.3 million |
1. Lido DAO
Lido is a liquid staking solution for proof-of-stake (PoS) blockchains, that works by aggregating note operator partners who run the underlying validator infrastructure for Ethereum, Solana and Terra blockchain networks. It was initially launched back in December 2020, when the Ethereum 2.0 vis-à-vis the PoS based Beacon chain entered Phase 0 (which was recently merged with the Ethereum Mainnet back in 15 September, 2022).
The Beacon chain only allowed users with 32 ETH or multiples of that to stake tokens to the PoS chain. Further, users who once staked their ETH to the beacon chain (thus converting them to ETH 2.0) could no longer bridge back those to their original ETH (or the original PoW based ETH 1.0).
This is where Lido came into the picture. Lido as a platform allowed you to stake your ETH tokens to the Beacon chain through them, for any amount that you wished to and even received stETH in exchange for exactly the amount of ETH you staked. Essentially, this allowed users to earn rewards with staking on Ethereum 2.0 while maintaining liquidity while at the same time reducing the requirement for 32 ETH to any amount that a user wants.
Lido is run by a decentralized autonomous organization or a DAO, and its native crypto token is LDO which is an ERC-20 compliant governance token on the DAO. LDO is used to reward various DAO users and activities (as well as stETH and other assets within the treasury). Some common kinds of payments from the DAO include grants, referral program payouts, liquidity incentives, insurance purchases and even bug bounties.
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2. Frax Shares
Frax Shares is a stablecoin protocol that claims to be the first that was developed on a fractional algorithm. Like most other cryptos – this is a permissionless, open-source and completely on-chain crypto developed on the Ethereum blockchain along with other chains too. The main purpose of Frax Shares protocol is to create a highly expandable, decentralized and algorithmic stablecoin htat substitutes fixed supply assets such as Bitcoin or anything else.
The platform runs using two tokens – one is the FRAX token, which is valued at $1 and acts as the stablecoin running on the fractional algorithm. Secondly, there is the Frax Shares token, or the FXS that is a governance token which is used to accrue fees, seigniorage revenue, and excess collateral value.
The stablecoin managed by this platform is truly unique as it uses a very different kind of stablecoin as it doesn’t confirm to the industry standards built so far. The standards built so far were either fiat collateralized (USDT or USDC) or overcollateralized with crypto or algorithmic with no collateral (like UST). Frax defines itself in a wholly new category itself – thus becoming a true contender on this list of top liquid staking tokens for 2023.
According to the project’s whitepaper, FRAX is the stablecoin with portions of its supply guaranteed by collateral and parts of its supply determined by an automated mechanism. This ecosystem is entirely community-governed, emphasizing a fully automated, algorithmic approach that does not require active supervision by any single person or group.
3. Rocket Pool
Rocket Pool is another decentralized Ethereum (ETH) staking protocol that is run by the community. The main objective of this crypto asset is to be able to provide a better understanding of Rocket Pool to all Ethereum users. The team behind this project also caters to all the facets of collective ownership as a community-owned staking platform. This crypto was designed with the intention of also enabling users to stake ETH towards a network of decentralized node operators that has complete autonomy backed by the RPL collateral – which is also its native crypto token of the platform.
This is a crypto that is the first Ethereum staking pool that is completely decentralized. This platform is intended for two kinds of users, the first being those who wish to engage in tokenized staking with rETH and secondly, the users who wish to stake ETH and run a node. Rocket Pool nodes only need 16 ETH per validator, unlike the requirement of 32 ETH for single stakers to create a new validator node. On this platform, to construct a new ETH 2.0 validator, the 16 ETH gets combined with 16 more ETH from the staking pool (where people have put smaller amounts of ETH in exchange for rETH).
4. ANKR
Ankr is a crypto project built upon the Ethereum network, that was built with the objective of providing a Web3 infrastructure and cross-chain staking DeFi platform that aims to make it easy and affordable for anyone to participate in the blockchain ecosystems by building dApps, hosting nodes or even staking. It has been working towards its larger goal of providing ownership and control over data and applications to network participants and users.
The reason why Ankr is a part of this list of top liquid staking tokens for 2023 is that it aims to achieve its vision by three broad methods. Firstly, it works with the users and community first by design – needs of the people take foremost priority while developing the platform. Secondly, Ankr tried to reduce the complexity involved in the blockchain world by providing an easy to use Web3 infrastructure that is intuitive too. It also offers one-click solutions for users to earn rewards on their holdings. And thirdly, Ankr also wants to empower developers on their platform with easy to use tools and interfaces to a multichain environment.
According to its whitepaper, Ankr was initially introduced as a “distributed cloud computing network”. What that means that it serves as a computing model to serve data and applications from geographically distributed sites to meet needs for performance and compliance. The idea behind this initially was that idle cloud computing power shouldn’t go to waste. Thus its main objective was to utilize this extra cloud computing capacity from a network of idle devices instead of relying on a single cloud computing power.
Read more: Top Layer 2 Crypto Projects
5. StaFi
One of the more unique protocols on this list – StaFi is a cross-chain staking derivative protocol. Thus, the project aims to unlock the liquidity of staked crypto assets for users. Aptly named using the abbreviations of Staking and Finance, StaFi seeks to improve and maximise the returns generated for users from the staking ecosystem. Instead of crypto assets simply lying around gaining some returns through the staking ecosystem – one can use StaFi to further improvise and gain more efficient returns out of the market. The StaFi platform tries to achieve this using the assistance of its rTokens such as the rDot, rBNB, rATOM and the likes.
According to StaFi’s whitepaper, the traditional proof-of-stake based ecosystem of staking presents issues that stifle the large scale growth and adoption. This is because staked tokens, by design need to be locked away for a certain period of time to maintain the security of the network. However, locking up cryptos become prone to security risk as the value of those cryptos can go down and they would be unable to take any action. Thus to bridge this gap, StaFi’s platform allows users to earn extra income over and top of the yields they earn through staking their crypto holdings. This is the reason why it forms a definitive part of the list of top liquid staking tokens for 2023.
CONCLUSION
This is a comprehensive list of some of the most unique and different projects that you can invest in 2023 to reap passive income, even if the bear market continues its spell. However, investors should do their own research as the crypto market is extremely volatile. These are projects that can involve locking up of tokens for a specific period of time and that can become a bit problematic as you won’t be able to sell whenever you like. Thus researching further would bring about more understanding and conviction before investing your hard earned money into these cryptos.
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