Liquid Staking vs Native Staking

Staking has emerged as a popular method for cryptocurrency holders to earn crypto by participating in network security and consensus. Two primary crypto staking options have gained prominence: liquid staking and native staking. Understanding the differences between these two approaches is important for investors looking to maximize their rewards.

In this article, we explore the differences between liquid staking and native staking. We will also provide a step-by-step guide on how to participate in staking using the Web3 Trust Wallet browser.

Before We Get Started

Before we explore staking in more detail, remember that with Trust Wallet, you have access to over 24+ in-wallet staking options, making it easier than ever to contribute to your favorite networks and watch your portfolio grow.

Download Trust Wallet as a mobile app, or install the Trust Wallet Extension on your desktop browser.

Crypto Staking Overview

Cryptocurrency staking is an increasingly popular method for investors to earn rewards and participate in the network security of blockchain projects. Staking involves holding a certain amount of cryptocurrency in a wallet to support the operations of a blockchain network. This process is essential for maintaining the network's integrity and functionality.

When someone stakes their coins, they lock them in a wallet to be used for transaction validation. In return, they receive staking rewards, usually in the form of additional coins. The rewards can be viewed as a form of interest, providing an additional income stream for holders.

What is Liquid Staking?

Liquid staking is a relatively new innovation in the cryptocurrency space. Liquid staking enables users to stake their digital assets while retaining liquidity. Liquid staking gives users the opportunity to receive liquid staking tokens (LSTs) in return for their staked assets. These tokens can be traded, transferred, or used in other DeFi applications, providing a layer of flexibility that native staking lacks.

Some of the benefits of liquid staking include:

• Liquidity: Users can trade or use liquid staking tokens without waiting for the unstaking period to end.

• Increased yield opportunities: Liquid staking tokens can be used in various DeFi protocols to earn additional yields.

• Flexibility: Users are not locked into a single staking protocol and can switch between different platforms easily.

Pros and Cons of Liquid Staking

Liquid Staking Pros

• Liquidity: Users can trade or use liquid staking tokens (LSTs) in DeFi applications without waiting for an unstaking period.

• Flexibility: Liquid staking tokens can be moved, traded, or used across multiple platforms, providing greater versatility.

• Increased Yield Opportunities: LSTs can be further invested in various DeFi protocols to earn additional returns.

Liquid Staking Cons

• Complexity: Liquid staking often involves more steps and a higher learning curve compared to native staking.

• Smart Contract Risks: Liquid staking relies on smart contracts, which can be vulnerable to bugs or exploits.

• Lower Staking Rewards: Protocol fees or the need to split rewards among multiple users can sometimes result in lower overall returns compared to native staking.

Popular Liquid Staking Protocols

Liquid staking has been welcomed by several innovative protocols, each offering unique features and benefits to users. Here are some of the most popular ones:

RocketPool

RocketPool is a decentralized Ethereum staking protocol that allows users to stake their ETH and receive rETH, a liquid staking token. RocketPool is designed to be highly decentralized and secure, with a robust network of node operators. Users can stake as little as 0.01 ETH, making it accessible to a wide range of investors.

Lido

Lido is another leading liquid protocol, supporting multiple blockchains such as Ethereum, Solana, and more. When users stake their assets with Lido, they receive liquid staking tokens like stETH (staked ETH) that can be used in DeFi applications.

Ankr

Ankr provides a decentralized infrastructure for Web3, including liquid staking solutions for multiple blockchains. Users can stake their assets and receive liquid staking tokens that can be used for further investments within the DeFi ecosystem.

How to Connect Your Trust Wallet to Liquid Staking Protocols

Below, we’ll use RocketPool as the example, but the process is generally the same for most protocols.

If you’re using the mobile app, open Trust Wallet and select the “Browser” tab, then search “RocketPool” or enter the URL, rocketpool.net, into the search bar, and select the “Done” button. If you’re using the browser extension, simply navigate to the orca.so URL site.

• Select the “Discover” button from the wallet home screen.

• Simply navigate to the rocketpool.net URL site.

• Navigate to the dropdown on the top right and select “Launch & Stake ETH”

• Tap “Connect Wallet” and select “Trust Wallet” to connect your wallet.

• Once you have connected your wallet, you can choose the amount of ETH you would like to stake.

• Follow the remaining instructions to confirm your stake.

What is Native Staking?

Native staking refers to the process of locking up cryptocurrency tokens in their original blockchain network to support its operations, such as transaction validation and network security. In return for staking their assets, participants earn staking rewards, typically in the form of additional tokens. Native staking requires users to lock up their assets for a specific period, during which they cannot access or use these funds.

Some of the benefits of native staking include:

• Network security: Enhances the security and decentralization of the blockchain network.

• Staking rewards: Provides a steady stream of rewards for participating in network operations.

• Simplicity: Often more straightforward to set up and understand compared to liquid staking.

Pros and Cons of Native Staking

Native Staking Pros

• Simplicity: Native staking is generally easier to understand and execute, especially for beginners.

• Network support: Directly contributes to the security and decentralization of the blockchain network.

• Potentially higher rewards: Rewards may be higher since there are no protocol fees or middlemen involved.

Native Staking Cons

• Lack of liquidity: Assets are locked up for a fixed period, making them inaccessible for trading or other uses.

• Opportunity cost: Locked assets cannot be used for other investments or in DeFi applications during the staking period.

• Inflexibility: Users cannot easily switch staking protocols or unstake without waiting for the lock-up period to end.

How to Stake ETH Using Trust Wallet?

Firstly, if you don’t have any of the stakeable assets in your wallet, you can deposit crypto using the “Receive” button, or buy crypto directly using Trust Wallet.

Now you’re ready to stake and earn rewards. Staking can be done in just a few steps, and here’s how.

Note: Below we’ll use staking Ethereum (ETH) as the example, but the process is generally the same for each asset.

• Select the “Earn” button from the wallet home screen.

• Select the asset you want to stake, in this example it’s “ETH”.

• Select “Stake”.

• Choose the amount you want to stake and choose the validator you want to use by selecting the Validator dropdown.

• Once you choose a validator, select “Continue”.

• Follow the remaining instructions to confirm your stake.

In addition to staking crypto, Trust Wallet lets you manage and interact with 10M+ crypto assets across 100+ blockchains. Download the latest version of Trust Wallet today.

Disclaimer: Content is for informational purposes and not investment advice. Web3 and crypto come with risk. Please do your own research with respect to interacting with any Web3 applications or crypto assets. View our terms of service.

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Note: Any cited numbers, figures, or illustrations are reported at the time of writing, and are subject to change.