SECURITY

Liquid Staking: A Better Way to Earn With Your Crypto

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Staking your crypto has some great benefits. Not only can you earn a passive income, but you can help platforms to stay secure through the Proof of Stake mechanism (or similar). But the staking process isn't the same on all platforms. The types of supported coins, staking periods, and type of staking differ based on who you choose to stake with.

Liquid staking is a type that is becoming particularly popular. So, what is liquid staking, and is it better than locked staking?

What Is Liquid Staking?

lock and chains crossed out

If you've staked before, you may have had to lock up your staked crypto funds for a certain period. This is what allows for the popular Proof of Stake (PoS) consensus mechanism to work so well across thousands of different blockchains. It improves upon the Proof of Work mechanism, mainly because it's a lot more energy-efficient and can offer users healthier rewards.

However, if your crypto is "locked" in the staking process, you cannot transfer, sell, or otherwise use your funds until the staking period ends. These periods differ depending on the coin you're staking and the platform you're using, but can range from days to weeks and even months. This isn't a huge problem in staking but does put some users off, given that they can't touch their funds for what could be an extended period.

Related: What Is Cold Staking and Is It Better Than Online Staking?

On top of this, you may have to pay a penalty for pulling out of the staking process early, which is known as un-staking. Un-staking usually takes weeks to complete, so you have to wait quite a while before your funds become available.

This is where liquid staking comes in as a great alternative. Also known as soft staking, this method allows you to access your funds even when you're staking them. The funds remain in escrow, but aren't "locked" and inaccessible, as they would be with PoS staking. This happens by providing you with a tokenized version of the staked funds. You can buy, sell, and generally use them in the same way you would use your original funds.

Additionally, liquid staking doesn't have a lengthy un-staking process. This makes the entire process much more convenient. In short, liquid staking offers the best of both worlds: a passive income and access to your staked funds. So which exchanges offer liquid staking?

Related: The Best Platforms That Charge Little to No Staking Fees

Where Can You Liquid Stake?

bitcoin in soil

There's a range of great crypto platforms that offer liquid staking, so here's a short list of just a few of the top places.

1. KuCoin

kucoin exchange screen magnified
Image Credit: marcoverch/Flickr

KuCoin is a popular cryptocurrency exchange that allows you to liquid-stake your funds. KuCoin calls this soft staking and introduced the method in 2019. It didn't take long for hundreds of thousands of users to begin liquid staking on KuCoin. It now stands as one of the most popular liquid staking platforms out there. There is a range of different coins you can stake on KuCoin, including Algorand, Ethereum 2.0, Cosmos, and Tezos, with varying fees and reward rates.

2. Lido

lido staking website homepage screenshot

Lido is not an exchange, but a liquid staking platform on the Ethereum blockchain. This is another popular option for liquid staking and allows users to stake Ethereum 2.0, Solana, and Terra without locking up their funds. However, there is a 10% staking fee, which Lido takes from your earned rewards, so keep this in mind.

3. Crypto.com

crypto.com earn page screenshot

Crypto.com is another great crypto exchange that offers liquid staking. You can liquid stake a huge range of cryptocurrencies on Crypto.com, including Bitcoin, Ethereum, Litecoin, and Ripple. On top of this, you can stake some stablecoins, like Tether and USD Coin. These all have variable reward rates and minimum holdings, which you can check out via the "Earn" page on Crypto.com.

Liquid Staking Is a Great Alternative to PoS Staking

Without lock-up windows or long un-staking periods, liquid staking is a great alternative to PoS staking. What's more, it's supported by several great platforms, such as those listed above. So, check them out if you're considering giving liquid staking a try. You might never go back to PoS staking again!

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