Community Poll Review - July 2023
Thanks for participating in the quiz! If you're lucky, you may hear from us after the quiz deadline regarding an ETH reward headed your way =)
How do you think you did on this quiz? Let's review the questions together below:
Liquid Staking enables users to unlock the liquidity of staked ETH by creating a new token that represents the staked ETH, making it usable across various DeFi protocols.
The benefits of Liquid Staking are as follows:
Traditional staking provides users with the opportunity to receive rewards for verifying transactions. Liquid staking enables users to continue receiving these rewards while also earning additional yield across various DeFi protocols.
Composability in DeFi
By representing receipts for staked assets as tokens, they can be used across the DeFi ecosystem in a wide variety of protocols, such as lending pools and prediction markets.
Tokens staked in a network such as Ethereum are locked and cannot be traded or used as collateral. Liquid staking tokens unlock the inherent value that staked tokens hold and enable them to be traded and used as collateral in DeFi protocols.
We need diversity in liquid staking protocols to prevent a single protocol from exceeding consensus thresholds. Each protocol may have different mechanisms and governance structures that can act as checks and balances to prevent any one protocol from gaining excessive control over the staking process.
Read more about the risks of Liquid Staking: https://notes.ethereum.org/@djrtwo/risks-of-lsd
Each of the following protocols provides Liquid Staking services with varying rewards and approaches. You can explore their documentation, linked below, to choose your preferred provider:
- Rocket Pool - https://docs.rocketpool.net/guides/staking/overview.html
- Frax Finance - https://docs.frax.finance/frax-ether/overview
- Lido Finance - https://docs.lido.fi
- StakeWise - https://docs.stakewise.io
Learn more about Liquid Staking: