Liquid Staking
as of 02/01/2025
Last updated
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as of 02/01/2025
Last updated
Was this helpful?
The Hatom Liquid Staking Protocol provides a solution that enhances network security and rewards while maintaining asset liquidity. In traditional staking, users who secure the network and earn staking rewards face a cooldown period when attempting to unstake their assets. With Liquid Staking, users receive a receipt token that accrues staking rewards and represents their staked assets.
The Liquid Staking Smart Contract stakes the user's tokens by delegating them to whitelisted staking providers, also known as Hatom Node Operators, ensuring optimal returns. These staking rewards are reflected in the increasing value of the liquid tokens, allowing users to seamlessly incorporate staking yields into their liquid token balance. This approach preserves the liquidity of their assets and grants them the flexibility to access their investment without any waiting period.
Hatom offers Liquid Staking for both EGLD, the native token of MultiversX, and wTAO, the wrapped version of TAO, the native token of Bittensor, which is bridged into the ecosystem through the TAO Bridge.
In traditional Proof-of-Stake (PoS) protocols, staking involves locking tokens in the network for an extended period, similar to a fixed-term financial bond, yielding a set reward. While this approach secures returns on staked assets, it limits the token holder’s ability to pursue potentially more lucrative opportunities within the broader DeFi ecosystem. For example, if an investor’s entire cryptocurrency portfolio is staked, they lose the flexibility to trade or participate in other promising ventures across the ecosystem.
Hatom Protocol’s Liquid Staking solution overcomes these limitations by issuing users receipt tokens for their staked assets—sTokens like sEGLD (liquid-staked EGLD) or swTAO (liquid-staked wTAO)—which retain liquidity and can be used in additional DeFi activities. This model offers several advantages:
No Lock-Up Periods: Users can swap their assets at any time, allowing flexibility to respond to market changes or personal liquidity needs.
Auto-Compounding: Staking rewards are automatically reinvested to compound returns, maximizing potential earnings without requiring user intervention.
DeFi Utility: The interest-bearing tokens received through liquid staking can be utilized in various DeFi applications. Users can create liquidity pools (LPs) to earn trading fees or deposit their liquid staking tokens into lending protocols to leverage their positions.
When you stake your native tokens in the Liquid Staking Protocol, you receive a corresponding Liquid Token receipt that represents the staked amount. If you decide to unstake, you will be subject to the standard cooldown period for unstaking. To avoid any cooldown period, you can sell your liquid staking tokens directly on a decentralized exchange (DEX) therefore bypassing the cooldown period.
