Liquid staking refers to a process in the Proof-of-Stake (PoS) ecosystem that enables stakers to have liquidity over their staked assets. Traditionally, in PoS networks, staked assets are locked for a specific duration, restricting users from accessing them instantly. Liquid staking, however, mitigates this by providing a representation of staked assets, often in the form of synthetic or derivative tokens, which can be freely traded, lent, or utilized in other decentralized finance (DeFi) protocols while continuing to earn staking rewards.

This innovative approach brings several benefits, merging the security and reward system of PoS networks with the flexibility of DeFi. By allowing stakers to utilize their staked tokens in DeFi activities, liquid staking can significantly increase the utility and liquidity of staked assets. It also broadens the possibilities for yield generation, as stakers can simultaneously earn staking rewards and yield from various DeFi protocols.

However, it's essential to understand that while liquid staking offers additional utility and flexibility, it also comes with its own set of risks. These risks include smart contract vulnerabilities and market risks associated with the trading of synthetic tokens. Therefore, before engaging in liquid staking, it's crucial to conduct due diligence and understand the potential risks involved.

At STAKING AI, we partner with leading liquid staking providers and can help you navigate some of these risks, as well as introduce you to their solutions on multiple networks. Do not hesitate to reach out to our team for more information.

Proof-of-Stake (PoS) is a widely adopted consensus algorithm used by various blockchain networks, and notably Ethereum. Unlike Proof-of-Work (PoW), its renowned counterpart, PoS selects validators for block creation and verification based on their stake in the network. The stake, encompassing the validator's bond and the delegated cryptocurrencies they oversee, translates to voting power within the network.

Under the PoS model, validators don't solve complex mathematical problems to validate transactions or create new blocks, as is the case with PoW. Instead, the creator of the next block is chosen via a unique combination of random selection and the proportion of network stake, or voting power, held in the network. This distinctive algorithm enables PoS to achieve distributed consensus within the blockchain network.

One key advantage of Proof-of-Stake is its energy efficiency. Requiring less computing power than Proof-of-Work, PoS offers a more sustainable alternative for blockchain networks, ensuring the integrity of transaction validation and block creation in an environmentally conscious manner.

Furthermore, PoS is more community oriented, as token holders can lock up their cryptocurrencies to participate to the consensus algorithm and earn inflationary rewards.

Node operators pledge tokens to a network as a guarantee for correctly performing block validation operations. These node operators receive newly minted tokens and transaction fees as rewards for adding valid blocks to the network. Those newly minted tokens and transaction fees are the rewards for staking and will be passed onwards to those who have staked their tokens.

Staking rewards are a function of several supply and demand factors on the network, and the actual reward granted to staking participants is determined at the time rewards are granted. For example, because the number of newly minted tokens is usually a fixed amount in a specific timeframe, staking rewards are higher with fewer node operators and vice-versa. These rewards are distributed proportionately on each successful checkpoint submission to each delegator based on their stake relative to the overall staking pool of all validators and delegators.

STAKING AI supports a broad range of Proof-of-Stake blockchain networks: Ethereum, Cosmos, Solana, Sui, Aptos, Polygon, and DOT, among others, for example. For the full list, please visit the STAKING AI staking plan page.

If you are interested to stake a cryptocurrency we do not support yet, do not hesitate to reach out to us.

To minimize the risk associated with managing digital assets, there are several protective measures you can take:

1. Maintain Custody of Your Assets: Be cautious about which centralized platforms you trust, as these have custody over your assets. At STAKING AI, we generally advise maintaining full custody of your assets and adhering to the best practices for key management and security.

2. Protect Your Seed Phrases and Private Keys: Your seed phrases and private keys are confidential and should never be shared with anyone. These give total access to your digital assets.

3. Utilize Hardware Wallets: For the secure storage of your digital assets, consider using hardware wallets. These devices provide more robust security than software wallets.

4. Update Your Wallet Software Regularly: Keep your wallet software up-to-date to benefit from the latest security enhancements. Software updates often contain vital security improvements.

5. Beware of Phishing Attempts: Stay alert for potential phishing attempts. Always verify URLs and email senders before providing personal information. Beware of impersonators pretending to be our team members or other trusted entities.

6. Secure Your Device: Enhance your device's security by using updated antivirus software, firewalls, and other protective measures.

7. Backup Your Wallet Regularly: To safeguard your assets in the event of device loss, theft, or damage, regularly back up your wallet.

8. Use Trusted Networks: Avoid accessing your digital asset accounts on public or untrusted networks to prevent exposure to additional security risks.

9. Opt for Reputable Custodians: Well-established technology and regulated custody solutions can help protect your assets. Particularly for institutions with large assets under management and corporate treasuries, these solutions come highly recommended.

If you stake on day D, interest will start accruing immediately and will be paid every 24 hours.

Delegation allows you to earn rewards on your stake without operating your own validator. By staking your tokens, you earn the protocol inflation, minus a fee charged by your chosen validator. As rewards accrue, these can also compound and generate new rewards in the future. Additionally, by staking your tokens, you get to contribute to the security and decentralization of your preferred Proof-of-Stake networks.

Delegating your tokens in the context of Proof-of-Stake (PoS) involves assigning the voting rights of your tokens to another account, typically a validator. This process, also referred to as staking, enables you to participate in the network consensus and earn inflation rewards, without the technical complexities of operating a validator node yourself.

However, there are certain risks associated with the delegation of your cryptocurrencies. One such risk is slashing, a mechanism in some PoS protocols where a portion of a validator's stake can be 'slashed' or forfeited if they act maliciously or fail to properly validate transactions. Therefore, due diligence is crucial before selecting a delegation service to mitigate this risk. At STAKING AI, we boast a strong track record of running reliable and resilient web3 infrastructure, and also offer contractual slashing guarantees to institutional customers.

Another inherent risk is market volatility. Cryptocurrencies are known for their price fluctuations, which can impact the value of your staked assets. When staking tokens, they may be locked for varying periods, from a few days to a few weeks, which means you may not be able to trade these instantly when required, unless you unstake. At the moment, we do not offer any hedging solution to guard against these market risks. It's crucial to carefully consider these risks before proceeding with token delegation.

Do not hesitate to reach out to our team if you have any further questions on staking risks or want to get to know more about our slashing coverage solutions.

You can contact us through 24-hour online customer service or official email [email protected].