What Is the Difference between Solo Staking and Liquid Staking?
Solo staking involves running your own validator node and locking up the required minimum amount of native cryptocurrency (e.g. 32 ETH for Ethereum).
It offers maximum rewards and control but requires technical expertise and capital. Liquid staking involves depositing funds into a staking pool, receiving a liquid staking derivative (LSD) token in return, which can be traded or used in DeFi.
It offers liquidity and lower capital requirements but introduces smart contract risk.
Glossar
Liquid Staking
Mechanism ⎊ Liquid Staking is a decentralized finance primitive that allows users to stake their tokens in a Proof-of-Stake protocol while simultaneously receiving a liquid, tradeable derivative token representing their staked position and accrued rewards.
Liquid Staking Derivative
Token ⎊ A liquid staking derivative (LSD) is a financial token issued to a user upon staking their native cryptocurrency in a Proof-of-Stake protocol, representing both the staked principal and the accrued staking rewards.
Solo Staking
Stewardship ⎊ Within the evolving landscape of cryptocurrency and decentralized finance, solo staking represents a paradigm shift towards individual responsibility in network validation and reward generation, aligning closely with principles of environmental and social stewardship.
Staking
Yield ⎊ Staking, within cryptocurrency ecosystems, represents a mechanism for participants to earn rewards by actively participating in the operation of a blockchain network, typically by locking up their crypto assets for a defined period.