What is liquidity Staking?

Liquidity Staking allows users to stake encrypted assets such as Ethereum (ETH) or Solana (SOL) and receive Liquidity Staking Tokens (LSTs) such as stETH or mSOL. These tokens represent the staked assets and accumulated rewards, and can be used for trading, borrowing, or liquidity mining in DeFi applications. Unlike traditional staking where assets are locked, Liquidity Staking maximizes capital efficiency. As of 2025, the total value locked (TVL) in the global Liquidity Staking market has exceeded $25 billion, reflecting its growing popularity.

Best Staking Protocol for Liquidity in 2025

1. Lido Finance

Overview: Lido Finance was launched in December 2020 and is the largest liquid staking protocol, with over 29% market share in the Ethereum staked ETH market. It supports liquid staking on Ethereum and Polygon, with stETH as its primary liquid staking token.
Key Features:

• Barrier-free: No minimum ETH Staking requirement, suitable for beginners.

• APY: Provide an annual percentage rate (APR) of up to 3% for ETH Staking.

• DeFi Integration: stETH has gained wide support on DeFi platforms such as Curve, Aave, and Uniswap.

• Governance: Managed by Lido DAO, protocol upgrades are decided by LDO token holders through voting.

advantages:

• High liquidity of stETH in the DeFi ecosystem.

• Solid security, regular audits, and open-source code.

• Multi-chain support enhances diversity.

Consensus:

• 10% fee for Staking rewards.

• Centralization concerns arising from its dominant market share and limited node operators (30 entities).

1. Rocket Pool

Overview: Rocket Pool, launched in November 2021, is the second largest staking protocol on Ethereum with a market share of 2.8%. It emphasizes decentralization and has over 2,700 node operators. Its staking token is rETH.
Key Features:

• DecentralizationAllowing users with 8 ETH to run nodes, reducing the entry barrier.

• APY: Providing an annualized interest rate of 2.8% for stakers, and up to 6.3% for node operators.

• Minimum stake: 0.01 ETH for liquidity staking.

• governance: Use RPL tokens for network incentives and penalty insurance.

Interest:

• Highly decentralized, enhancing the security of the Ethereum network.

• Lower centralization risk compared to Lido.

• Community-driven, high trust, non-custodial design.

Cons:

• 15% higher fees than Lido.

• In the DeFi market, rETH has less liquidity than stETH.

1. Marinade Finance

Overview: Marinade Finance is a leading staking protocol on Solana, optimizing staking rewards by routing assets to high-performing validators. Users receive mSOL tokens for staking.
Key Features:

• Staking Optimization: Automatically select top validators to maximize returns.

• APY: The fluctuation is usually 5-8% for SOL Staking.

• DeFi Integration: mSOL is supported on Solana's DeFi platforms Orca and Saber.

• GovernanceCommunity-driven, use MNDE tokens for voting.

Advantage：

• Customized for Solana's fast, low-cost ecosystem.

• No minimum requirement for flexible Staking.

• Powerful integration with Solana DeFi.

drawback:

• Only available on Solana, reducing cross-chain interoperability.

• Exposed to specific risks on the Solana network.

1. Frax Finance

Overview: Frax Finance provides liquidity staking through Frax Ether, issuing frxETH and sfrxETH tokens. This is a multifunctional DeFi ecosystem with a focus on cutting-edge services.
Key Features:

• APY: The competition is fierce, with ETH Staking at around 3-5%.

• Flexibility: sfrxETH can be used for yield farming and lending.

• Governance: Community-led DAO, actively engaging voters.

Interest:

• Innovative DeFi integration, providing additional yield.

• Non-custodial and audited to ensure security.

• Attract experienced DeFi users.

Cons:

• More complicated than Lido or Rocket Pool.

• The lock-up period for certain assets is 3-12 months.

1. Jito

Overview: Jito was launched in November 2022, is a staking protocol based on Solana, and issues the JitoSOL token. Initially, it used a Maximum Extractable Value (MEV) strategy to achieve higher returns, but discontinued this feature in 2024 due to network issues.
Main Features:

• APY: The annualized return on SOL Staking is approximately 6-8%.

• Governance: JTO token holder governance protocol.

• DeFi integrationJitoSOL is widely used in the DeFi ecosystem on Solana.

Advantages:

• Solana has a strong presence in the liquid staking market

• JitoSOL has high liquidity in DeFi applications.

Cons:

• 4% annual management fee.

• Controversies related to MEV may affect trust.

Benefits of liquidity staking

• Liquidity: LSTs allow users to trade or use staked assets without unstaking.

• Increase revenue: The staked tokens can be used to earn additional yield in DeFi.

• Network Security: Encourage Staking to strengthen the PoS blockchain.

Risks to consider

• Smart Contract RiskErrors or vulnerabilities in smart contracts may result in losses.

• Market volatility: The value of LST may fluctuate with the underlying assets.

• Platform Risk: Third-party platform malfunctions, such as hacker attacks, may affect LSTs.

Choose the right protocol

Choosing a Staking platform depends on your priority considerations:

• For accessibility and liquidityDue to its ease of use and staking dominance in the DeFi space, Lido is the ideal choice.

• In order to decentralize: Rocket Pool's extensive node operator network is aligned with the principles of Ethereum.

• For Solana investors: Marinade or Jito provides optimized Staking within the Solana ecosystem.

• For advanced DeFi users: Frax Finance offers complex yield opportunities.

The future of Staking liquidity

By 2025, with the acceleration of DeFi adoption, the growth of liquid staking protocols is expected. Innovations such as re-staking (e.g., EigenLayer) and multi-chain support will enhance their utility. Investors should conduct comprehensive research on platforms, considering fees, security, and network alignment. With over $15 billion worth of ETH staked through liquid protocols, this sector is the cornerstone of decentralized finance.

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