The Rising Tide of Liquid Staking
Liquid Staking and how MagmaDAO plays a role
First things first
Liquid staking could supercharge the efficiency and flexibility of blockchain ecosystems. It’s a technological development that has had a rather large impact in both CeFi and DeFi.
Protocols like Lido and Jito have been welcomed with open arms by their respective communities. Having seen the positive effect on the ETH and SOL ecosystems, MagmaDAO is ready to step up and build a community focused Liquid Staking protocol for Monad's burgeoning ecosystem.
At its core, liquid staking allows users to earn staking rewards without locking up their assets. Literally like having your cake and eating it too - yum!
With traditional staking you have to lock your assets up whilst you are farming rewards. During that time, you cannot access them and many staking protocols have lock/unlock periods, making it a slow process to unstake assets and sell at your discretion.
Liquid staking protocols issue you a token representing your staked assets, enabling you to use your assets. This means you are able to sell without going through the process of unstaking but it also means you are able to acquire staked rewards through other DeFi applications by purchasing these liquid staking tokens that represent a portion of staked assets. While traditional staking methods involve bonding and unbonding periods that can last from days to weeks, liquid staking offers stakers greater liquidity and capital efficiency.
Simple right?
Yea, Dan, our CMO didn’t understand it when our founder explained it to him either. So to make it a bit simpler, we added an infographic.
There, now you got it.
Lido and Jito: Paving the Way
MagmaDAO has been looking at market leaders Lido and Jito who have been instrumental in popularizing liquid staking.
Lido allows users to stake their Ethereum and receive stETH in return, representing their staked ETH plus rewards. By doing this, they opened up the Ethereum blockchain to even more users, some of which might have been on the fence to stake. As such, Ethereum became more attractive for low value stakers and simultaneously more decentralized.
Jito, on the other hand, has focused on scalability and efficiency, enhancing the user experience for Solana users.
Oh and they released a juicy airdrop that gave people the Jitos
Sorry guys Dan really loves dad jokes.
CeFi Alternatives
Because of challenges in accessing DeFi, large exchanges such as Kraken, Coinbase and Binance have provided a form of liquid staking to their users.
This is important because if you’d like to run an ETH staking node solo, you would need to stake 32 ETH and have a computer with at least a CPU with 4+ cores, 16GB RAM, 1TB storage space on an SSD drive (for starters) and internet that reaches the speed of light.
As they pool their users’ assets and stake it on their behalf, they successfully tackle the requirement for minimum capital and release the users from the operational burden.
As CeFi institutions issue a liquid market for staked assets, they are effectively unlocking liquidity and allowing users to swap back from staked ETH to ETH. These services are valuable for their users, creating a big opportunity for a decentralized alternative.
MagmaDAO is looking to fulfill a similar service for Monad, but decentralized.
Our Solution
By building liquid staking for Monad, MagmaDAO is taking a formidable leap adapting large scale liquid staking models with a community focus to fit the unique needs of the Monad ecosystem. Our goal? MagmaDAO aims to offer enhanced liquidity, greater flexibility, and increased participation in governance for the Monad ecosystem. With this, we envision to bring the following benefits to the Monad ecosystem
Increased Liquidity: Users aren't forced to choose between staking and other DeFi activities. This fluidity encourages more participation and investment, boosting TVL on Monad and making it attractive for even more investors, creating a positive loop
Enhanced Security: More staking means a more robust and secure network.
Governance Participation: Liquid staking tokens often come with voting rights, fostering a more democratic ecosystem which will enhance decentralization for Monad.
MagmaDAO will establish balance honing in on the competitive nature of hunting for incentives between staking and seeking yield in DeFi. By issuing a Monad-native liquid token, MagmaDAO will allow users to stake native Monad tokens as collateral within DeFi in the same way users leverage ETH or SOL holdings.
MagmaDAO is not just implementing liquid staking, our big brain devs are looking for ways to innovate. They are working on unique features like enhanced governance models and risk mitigation strategies to ensure the safety and efficiency of staking in Monad’s ecosystem.
TL;DR
The liquid staking protocol built by MagmaDAO signifies a momentous step for Monad's ecosystem. It’s not just about staking; it's about opening new avenues of participation, security, and liquidity with an unwavering commitment to decentralization
Stay in touch with us on X (Twitter) or hang out with us on Discord to follow our eruption into a promising, more vibrant and inclusive DeFi landscape.