What is Liquid Staking and How it Works?

Key Takeaways:

1. Liquid staking solves the problem of token illiquidity in traditional staking by providing users with tradeable tokens (LSTs) that still earn rewards.
2. Protocols like Tonstakers offer secure and flexible staking on the TON blockchain, allowing users to earn staking rewards while using tsTON across DeFi platforms.
3. Using LSTs in DeFi—such as lending, liquidity provision, and farming—enables additional yield opportunities, making liquid staking a powerful tool for maximizing capital efficiency.

Tonstakers is the leading TON liquid staking platform, offering features like slashing protection and wide DeFi integrations. Stake safe and effectively on Tonstakers.

Staking is a core mechanism in Proof-of-Stake (PoS) blockchains, where users lock up their tokens to help secure the network and, in return, receive regular on-chain rewards. It replaces the energy-intensive mining process found in Proof-of-Work networks. As more blockchains adopt PoS, staking has become a popular way for users to support the ecosystem while earning.

However, traditional staking also introduces a major limitation: illiquidity. When users stake their tokens directly on a PoS network, those tokens are locked for the duration of staking and cannot be moved or used elsewhere. This is the problem liquid staking solves, and in this article we’ll explain what is liquid staking, how liquid staking crypto works, and what are the best platforms for liquid staking.

Intro to Liquid Staking

Liquid staking has emerged as a solution to this problem. Instead of just locking tokens with no access, users receive a tradeable asset called a liquid staking token (LST) in return. This token represents their stake and continues to accumulate staking rewards, even as it remains available for other uses across DeFi platforms. Liquid staking crypto unlocks the potential for users to stay staked and earn, while also maintaining access to the liquidity of their assets.

Protocols like Tonstakers have adopted this model to help users stake their TON tokens while maintaining flexibility. By providing LSTs such as tsTON, users can tap into DeFi opportunities without sacrificing their staking rewards. With liquid staking gaining traction, it has become a core building block of the evolving PoS ecosystem.

What Is Liquid Staking?

Liquid staking is a decentralized system that allows users to earn rewards from staking while still having access to the value of their staked tokens. When a user stakes through a liquid staking protocol, they receive a corresponding liquid staking token (LST). This LST reflects their share of the staked assets and continues to grow in value as rewards are earned.

Unlike native staking, where assets are locked and illiquid, liquid staking introduces a new layer of utility. The LST can be used across various decentralized applications (dApps) for lending, liquidity provision, or trading, offering the benefits of both staking and liquidity.

How Liquid Staking Works

This is how liquid staking flow is built:

1. A user deposits tokens into a liquid staking platform.
2. The platform stakes those tokens with a validator or a pool of validators on the PoS network.
3. In return, the user receives LSTs that represent their stake.
4. These LSTs are freely transferable and usable across the ecosystem.
5. The platform automatically accumulates staking rewards, which are reflected in the growing value or amount of the user’s LSTs.

Staking pools play a central role by aggregating deposits and distributing them across multiple validators to ensure decentralization and optimal performance. Validators help secure the network and receive rewards for doing so, which are passed back to the users.

Through this model, users benefit from staking rewards while retaining full control over the liquidity and utility of their tokens. Protocols like Tonstakers make this process accessible with features such as auto-compounding, instant withdrawals, and integrations with top wallets and DeFi platforms. As liquid staking crypto grows, it's redefining how users participate in and benefit from PoS networks

Benefits of Liquid Staking

What is liquid staking's primary advantage? It is the ability to earn staking rewards while retaining access to your assets. In traditional staking, users must lock their tokens and wait through an unstaking period to access them again. With liquid staking, users receive a liquid staking token (LST) that reflects their stake and continues to earn rewards while being usable across the blockchain ecosystem.

This unlocks the opportunity for additional rewards. Liquid staking users can deposit LSTs into decentralized finance (DeFi) protocols to earn additional rewards. For example, tsTON can be used in lending platforms, liquidity pools, or yield farms while still accumulating staking rewards in the background. This expands the use of staked capital and makes it work harder across multiple layers of DeFi.

Because assets are no longer locked, capital efficiency improves. Users gain flexibility to move funds, hedge positions, or respond quickly to market changes without forfeiting staking rewards. For active participants in Web3, liquid staking is a more dynamic and useful staking method. LSTs also provide utility in governance participation, as some platforms allow staked token holders to vote on protocol proposals using their liquid tokens.

Protocols like Tonstakers combine staking with immediate access to LSTs and DeFi integrations, providing users with greater control and earning potential over their staked TON. With features such as autocompounding and integrations across leading TON dApps, users can optimize their holdings without sacrificing liquidity.

Risks and Considerations

Despite the benefits, liquid staking introduces new risks. Users should understand the potential downsides before engaging.

• Smart contract vulnerabilities: Liquid staking crypto relies on smart contracts, which can be exploited if not properly audited. Protocol errors or malicious attacks may result in the loss of funds. In 2025, over $1 billion was lost due to hacks and vulnerabilities, highlighting the importance of robust security audits.

• LST price volatility: Although LSTs like tsTON are designed to track the value of the staked asset, they can trade at a discount or premium depending on market demand and liquidity. This means their price may temporarily diverge from the underlying token. For example, during periods of high volatility, stETH traded up to 6% below ETH's value in secondary markets.

• Validator and protocol risks: Rewards and fund safety depend on validators behaving correctly and protocols operating as intended. Poor validator performance or protocol mismanagement can affect rewards or lead to slashing in some networks. Some protocols mitigate this with slashing protection features, such as Tonstakers, which shields users from penalties caused by validator issues.

Understanding these risks is key to managing exposure. Using well-audited platforms like Tonstakers helps reduce these risks, as it includes features like built-in slashing protection, multi-validator distribution, and regular audits.

The Best Liquid Staking Platforms

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Liquid staking has gained traction across major PoS blockchains, with several protocols leading adoption:

Ethereum:

• Lido (stETH): The largest liquid staking provider for ETH. Users receive stETH, which can be used in a wide range of DeFi applications. As of early 2025, Lido holds over $15 billion in staked ETH.

• Rocket Pool (rETH): A decentralized alternative to Lido, allowing users to run their own validator or stake through pools. It promotes decentralization and self-custody, with over 800 node operators worldwide.

Solana:

• Marinade (mSOL): Offers liquid staking for SOL with integrations across Solana DeFi. It supports decentralized validator selection and has helped stake over 10 million SOL.

• Jito (JitoSOL): Adds MEV rewards on top of staking, making it one of the more innovative offerings. Its validator network is optimized for performance and efficiency.

TON:

• Tonstakers (tsTON): The leading liquid staking protocol on TON. tsTON is accepted in major DeFi protocols on the network and provides staking rewards with full asset liquidity. With over 60 million TON in total value locked and integrations across top wallets and exchanges, Tonstakers plays a central role in TON's DeFi growth.

These protocols represent the evolution of staking in PoS systems, turning a passive activity into an active part of decentralized finance. With more users demanding both rewards and liquidity, liquid staking is quickly becoming a standard feature in blockchain ecosystems. Its combination of earning power, usability, and flexibility positions it as a critical tool for maximizing returns in a decentralized world.

Liquid Staking in DeFi

One of the most impactful developments in liquid staking is its integration into the broader DeFi ecosystem. Liquid staking tokens (LSTs) are not just passive assets; they can be actively deployed across various DeFi protocols to unlock new earning opportunities and expand their utility.

LSTs can be used in liquidity pools, where users provide liquidity to decentralized exchanges (DEXs) and earn fees from trades. They are also accepted in lending markets, where users can borrow against their LSTs or lend them out for interest. Additionally, LSTs are frequently integrated into yield farms and automated market makers (AMMs), enabling users to earn compound rewards across multiple layers.

A key example is tsTON, the liquid staking token from Tonstakers. tsTON is accepted on:

• STON.fi and DeDust, the two largest DEXs on TON, where users can provide liquidity and earn trading fees.

• EVAA, a lending protocol on TON where tsTON can be used as collateral or lent out to generate additional rewards.

This versatility transforms tsTON from a staking receipt into a fully functional asset within the DeFi economy.

What is Liquid Staking’s Future

Liquid staking is expanding beyond just basic LST issuance. Several trends are shaping the next phase of growth:

• Cross-chain and multi-asset support: More protocols are enabling users to stake assets from multiple blockchains or move LSTs across chains for broader DeFi access.

• Liquid Staking Derivatives (LSDfi): A new DeFi category built around LSTs. These include leveraged staking products, LST-backed stablecoins, and structured products that maximize rewards. LSDfi is expected to become a multi-billion dollar sector by 2025.

• Institutional-grade products: With the best liquid staking protocols offering both rewards and liquidity, institutional players are exploring it as a more flexible alternative to direct staking. Platforms that offer regulatory compliance and custodial services are likely to lead this wave.

As liquid staking becomes a foundational layer in DeFi, protocols that offer secure, efficient, and widely integrated LSTs will play a central role.

Conclusion

Liquid staking solves one of the main limitations of traditional staking by combining rewards with liquidity. It enables users to put staked capital to work across DeFi while continuing to support blockchain networks.

While the opportunities are significant, users must also remain aware of risks, including smart contract vulnerabilities, LST price deviations, and validator performance issues. Researching protocols, diversifying strategies, and understanding the underlying mechanics are key to safe participation.

For users looking to explore liquid staking, trusted platforms like Tonstakers offer a secure entry point. With deep integrations across TON DeFi, slashing protection, and user-friendly tools, Tonstakers is helping to shape the future of on-chain participation.