Crypto Basics

Liquid Staking - A Comprehensive Guide to Getting Started

Learn everything about liquid staking with our detailed guide. Check how to start and unleash the potential for passive income in the crypto space.
Marcus K
8 Minutes
MIN

Cryptocurrency enthusiasts are always on the lookout for new and innovative ways to make the most of their digital assets. One such method that has been gaining traction in recent years is liquid staking. 

This approach allows users to stake their tokens in proof-of-stake (PoS) blockchains while maintaining liquidity and participating in other decentralized finance (DeFi) activities. 

In this article, we will explore the concept of liquid staking, how it works, its advantages and disadvantages, popular cryptocurrencies that support this method, and how you can get started.

Understanding Staking and Its Benefits

Before delving into liquid staking, it's essential to grasp the concept of staking and its benefits. Staking involves locking up a certain amount of tokens in a PoS blockchain network to support its operations and security. 

In return for staking, participants can earn rewards in the form of additional tokens. Staking provides several benefits, such as incentivizing token holders to act in the network's best interest and maintaining the blockchain's security and integrity.

What is Liquid Staking?

Liquid staking takes the traditional staking model a step further by allowing users to stake their tokens and receive a separate token, known as a liquid staking token (LST), in return. 

These LSTs represent ownership of the staked tokens and can be freely traded, used in DeFi protocols, or transferred to other users. This innovative approach allows users to access liquidity and utilize their staked assets while potentially earning staking rewards.

How Does Liquid Staking Work?

Liquid staking involves a three-step process: staking, issuing liquid staking tokens, and unstaking. The first step is similar to traditional staking, where users lock their tokens in a designated smart contract on a liquid staking platform. The platform then verifies the tokens' legitimacy and stores them securely.

In the next phase, the platform issues the users liquid staking tokens (LSTs) as receipts for their staked assets. 

These LSTs are pegged to the value of the original tokens and can be used in various DeFi protocols and blockchain applications. The platform also utilizes the staked assets for native staking, earning rewards from securing the PoS blockchain.

When users decide to unstake their tokens, they must burn the corresponding LSTs. This process typically incurs a fee, and the platform verifies the burn transaction on-chain before returning the unstaked tokens to the user. 

It's important to note that liquid staking platforms may also impose a bonding period, during which users may have to wait before receiving their unstaked tokens.

Advantages of Liquid Staking

Liquid staking offers several advantages over traditional staking methods. Firstly, it provides increased accessibility and flexibility to users. 

Unlike traditional staking, which often requires a bonding period, liquid staking allows users to unstake their tokens and access liquidity immediately. This flexibility enables efficient capital allocation and utilizing staked assets in other financial activities.

Secondly, liquid staking enhances the liquidity of staked assets. Traditional staking typically locks up the tokens for a specific period, restricting their use and trading. With liquid staking, users receive LSTs that can be freely traded, swapped, or used as collateral in lending protocols. 

This additional liquidity opens up a world of possibilities for users, allowing them to maximize the utility of their staked assets.

Liquid staking also promotes the composability of DeFi protocols. By enabling users to use their LSTs in various DeFi platforms, liquid staking enhances the interoperability and integration of different applications within the decentralized ecosystem. 

Users can lend, borrow, or participate in yield farming using their LSTs, increasing their engagement and potential returns.

Lastly, liquid staking may offer higher rewards compared to traditional staking. Users can earn additional rewards on top of their original staking rewards by utilizing LSTs in multiple staking platforms. 

This strategy allows for the optimization of staking returns without the need for additional investments.

Disadvantages of Liquid Staking

While liquid staking offers numerous advantages, it's important to consider this method's potential risks and challenges. One significant risk is the possibility of smart contract vulnerabilities. 

Since liquid staking involves interacting with smart contracts, there is a chance of exploitation if a flaw or bug exists in the code. Choosing reputable and audited liquid staking platforms to mitigate this risk is crucial.

Another challenge is the potential for price volatility. LSTs are pegged to the value of the original tokens, but there is a risk of de-pegging if market conditions fluctuate significantly. 

If the LSTs' value deviates from the underlying assets, users may experience losses when trading or redeeming their LSTs. It's essential to closely monitor market conditions and assess the risks before engaging in liquid staking.

Additionally, liquid staking may involve higher fees compared to traditional staking. Liquid staking platforms often charge fees for the issuance and burning of LSTs, as well as network transaction fees. 

These costs can impact the overall profitability of liquid staking, especially for users with smaller staking amounts.

Staking Vs. Liquid Staking: Key Differences

It's important to distinguish between traditional staking and liquid staking to understand their unique characteristics. 

Traditional staking involves locking up tokens in a smart contract without the ability to use or transfer them until the staking period ends. Stakers earn rewards solely from staking activities.

On the other hand, liquid staking provides users with a receipt token (LST) that represents ownership of the staked assets. These LSTs are freely transferable and can be used in DeFi protocols, providing users with additional liquidity and utility. 

Liquid staking enables users to potentially earn rewards while still participating in other blockchain activities, offering a more flexible approach compared to traditional staking.

Popular Crypto That Supports Liquid Staking

Liquid staking has gained significant traction across various blockchain networks, with several cryptocurrencies supporting this innovative method. 

Ethereum, one of the largest and most well-known blockchains, has implemented liquid staking following its transition to a PoS consensus mechanism. 

Users can stake their ETH and receive liquid staking tokens (LSTs), such as stETH, which can be used in DeFi protocols and traded on supported platforms.

Other popular cryptocurrencies that support liquid staking include Polkadot, Cardano, Avalanche, and Cosmos. Each of these projects offers its own liquid staking solutions, allowing users to stake their tokens and benefit from the advantages of liquidity and additional utility.

How to Start Liquid Staking?

If you're interested in participating in liquid staking, choosing a reputable and secure platform that supports this method is essential. 

Ledger, a prominent cryptocurrency hardware wallet provider, offers a liquid staking platform through its Ledger Live ecosystem. 

Connecting your Ledger device to Ledger Live and navigating to the Discover tab allows you to explore liquid staking options available on supported networks such as Polygon, Hedera, BNB, Near, Terra 2.0, and Fantom.

By utilizing Ledger's secure infrastructure, you can stake your tokens, receive liquid staking tokens (LSTs), and participate in the vibrant world of DeFi while maintaining full control and custody of your assets.

Conclusion

Liquid staking is an innovative approach to maximize the potential of your crypto assets. By combining the benefits of staking with increased liquidity and utility, liquid staking offers users a flexible and efficient way to participate in PoS networks while enjoying the opportunities provided by DeFi protocols. 

It's important to weigh the advantages and disadvantages, consider the risks, and choose reliable platforms to ensure a successful liquid staking experience. 

With the growing adoption and development of liquid staking solutions, this method is poised to play a significant role in the future of blockchain-based finance.

Frequently Asked Questions

Q1. How is liquid staking different from traditional staking?

Liquid staking allows users to maintain liquidity and utilize their staked assets, while traditional staking locks up tokens for a specific period without the ability to use or transfer them until the staking period ends.

Q2. Which cryptocurrencies support liquid staking?

Popular cryptocurrencies that support liquid staking include Ethereum, Polkadot, Cardano, Avalanche, and Cosmos. Each project offers its own solutions for users to participate in liquid staking.

Q3. How can I start liquid staking?

To start liquid staking, choose a reputable platform that supports this method, such as Ledger's liquid staking platform. Connect your Ledger device to Ledger Live, explore the available options, and stake your tokens while maintaining full control of your assets.

Q4. Is liquid staking safe?

Liquid staking carries risks, such as smart contract vulnerabilities and price volatility. It's crucial to choose secure platforms, conduct thorough research, and stay informed about potential risks and developments in the cryptocurrency space.

Q5. Can I unstake my tokens in liquid staking?

Users can unstake their tokens in liquid staking by burning the corresponding liquid staking tokens (LSTs). However, the process may involve fees, and a bonding period may exist before users can receive their unstaked tokens.

Q6. What is the future of liquid staking?

Liquid staking is expected to play a significant role in the future of blockchain-based finance. As more projects adopt and develop liquid staking solutions, users can expect increased accessibility, liquidity, and integration with DeFi protocols, further enhancing the potential of their crypto assets.

Disclaimer

The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other advice, and you should not treat any of the website's content as such.

Token Metrics does not recommend buying, selling, or holding any cryptocurrency. Conduct your due diligence and consult your financial advisor before making investment decisions.

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What the DeepSeek API Does

The DeepSeek API is designed to index and retrieve contextual information across heterogeneous sources: whitepapers, GitHub repos, forum threads, on-chain events, and more. Unlike keyword-only search, DeepSeek focuses on semantic matching—returning results that align with the intent of a query rather than only literal token matches.

Key capabilities typically include:

  • Semantic embeddings for natural language search.
  • Document chunking and contextual retrieval for long-form content.
  • Metadata filtering (chain, contract address, author, date).
  • Streamed or batched query interfaces for different throughput needs.

Typical Architecture & Integration Patterns

Integrating the DeepSeek API into a product follows common design patterns depending on latency and scale requirements:

  1. Server-side retrieval layer: Your backend calls DeepSeek to fetch semantically ranked documents, then performs post-processing and enrichment before returning results to clients.
  2. Edge-caching and rate management: Cache popular queries and embeddings to reduce costs and improve responsiveness. Use exponential backoff and quota awareness for production stability.
  3. AI agent workflows: Use the API to retrieve context windows for LLM prompts—DeepSeek's chunked documents can help keep prompts relevant without exceeding token budgets.

When building integrations, consider privacy, data retention, and whether you need to host a private index versus relying on a hosted DeepSeek endpoint.

Research Workflows & Practical Tips

Researchers using the DeepSeek API can follow a repeatable workflow to ensure comprehensive coverage and defensible results:

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Limitations, Costs, and Risk Factors

Understanding the constraints of a semantic retrieval API is essential for reliable outputs:

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  • Bias and coverage gaps: Not all sources are equally represented. Cross-check against primary sources where possible.

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FAQ: What developers ask most about DeepSeek API

What data sources does DeepSeek index?

DeepSeek typically indexes a mix of developer-centric and community data: GitHub, whitepapers, documentation sites, forums, and on-chain events. Exact coverage depends on the provider's ingestion pipeline and configuration options you choose when provisioning indexes.

How do embeddings improve search relevance?

Embeddings map text into vector space where semantic similarity becomes measurable as geometric closeness. This allows queries to match documents by meaning rather than shared keywords, improving recall for paraphrased or conceptually related content.

Can DeepSeek return structured on-chain data?

While DeepSeek is optimized for textual retrieval, many deployments support linking to structured on-chain records. A common pattern is to return document results with associated on-chain references (contract addresses, event IDs) so downstream systems can fetch transaction-level details from block explorers or node APIs.

How should I evaluate result quality?

Use a combination of automated metrics (precision@k, recall sampling) and human review. For technical subjects, validate excerpts against source code, transaction logs, and authoritative docs to avoid false positives driven by surface-level similarity.

What are best practices for using DeepSeek with LLMs?

Keep retrieved context concise and relevant: prioritize high-salience chunks, include provenance for factual checks, and use retrieval augmentation to ground model outputs. Also, monitor token usage and prefer compressed summaries for long sources.

How does it compare to other crypto APIs?

DeepSeek is focused on semantic retrieval and contextual search, while other crypto APIs may prioritize raw market data, on-chain metrics, or analytics dashboards. Combining DeepSeek-style search with specialized APIs (for price, on-chain metrics, or signals) yields richer tooling for research workflows.

Where can I learn more or get a demo?

Explore provider docs and example use cases. For integrated AI research and ratings, see Token Metrics which demonstrates how semantic retrieval can be paired with model-driven analysis for structured insights.

Disclaimer

This article is for informational and technical education only. It does not constitute investment advice, endorsements, or recommendations. Evaluate tools and data sources critically and consider legal and compliance requirements before deployment.

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What is the Fabric API and why it matters

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Key characteristics of Fabric APIs include:

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Core components and SDKs to know

Interacting with Fabric typically involves several layers. Understanding these helps you choose the right API surface for your application:

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Cross-cutting concerns to design for:

  • Identity management: Use Fabric CA and hardware-backed keys where possible; separate admin and application identities.
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Practical steps for building, testing, and securing Fabric API integrations

Follow a structured approach when integrating with Fabric networks:

  1. Prototype locally: Use test networks (Fabric samples or Docker-based local networks) to validate transaction flows and endorsement policies before deploying to staging.
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  4. Automate CI/CD: Include unit tests for chaincode logic, integration tests against ephemeral networks, and deployment pipelines for chaincode packaging and approvals.
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Testing tips: use channel-level mock data, replay recorded endorsement responses for deterministic unit tests, and simulate peer failures to validate client retry logic.

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FAQ: What is the Fabric API?

The Fabric API comprises SDKs, the Gateway API, chaincode interfaces, and CA endpoints that let applications manage identities, submit transactions, and query ledger state on Hyperledger Fabric networks.

FAQ: How do I choose between Gateway and direct SDKs?

Use the Gateway API for simpler, high-level transaction workflows and reduced configuration. Choose direct SDKs when you need low-level control over discovery, endorsement policies, or custom peer selection logic.

FAQ: Can I expose Fabric functionality via REST?

Yes. Implement a secure REST proxy or API gateway to translate HTTP calls to Fabric SDK operations. This adds flexibility for web/mobile clients but requires careful identity and input validation.

FAQ: What are best practices for identity and key management?

Use Fabric CA for certificate issuance, adopt hardware-backed key stores where possible, separate admin and app roles, and rotate/revoke certificates according to policy. Avoid embedding private keys in client-side code.

FAQ: How should I monitor Fabric API usage and performance?

Instrument SDK calls, capture latency and endorsement statistics, log chaincode events, and integrate with observability stacks (Prometheus/Grafana). Monitor peer health and orderer topology to correlate API issues with network state.

FAQ: What common pitfalls should I watch for?

Common issues include endorsement mismatches due to non-deterministic chaincode, exposing credentials to clients, insufficient testing of policy changes, and lacking observability for transaction failures.

Disclaimer: This article is educational and technical in nature. It does not provide financial, legal, or regulatory advice. Implementations should be validated against your organization's compliance and security requirements.

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What is a REST API and core principles

REST (Representational State Transfer) is an architectural style that uses standard HTTP verbs and status codes to manipulate resources. Key tenets include:

  • Statelessness: Each request contains all information needed to process it; servers don’t maintain client session state.
  • Resources and representations: Resources are identified by URIs; responses return representations (JSON, XML) describing resource state.
  • Uniform interface: Use predictable HTTP methods (GET, POST, PUT, DELETE, PATCH) and status codes for consistent client-server interaction.
  • Layered system: Clients need not be aware of whether they communicate with the origin server or an intermediary.

Understanding these principles helps when choosing between REST, GraphQL, or RPC for a given use case. REST is well-suited for CRUD-style operations, caching, and wide compatibility with HTTP tooling.

Design patterns: resources, versioning, and idempotency

Good API design starts with modeling resources and their relationships. Practical patterns include:

  • Resource naming: Use plural nouns and hierarchical paths (e.g., /users/{userId}/orders).
  • Versioning: Use URL or header-based versioning (e.g., /v1/ or Accept header) to avoid breaking clients.
  • Idempotency: Ensure methods like PUT and DELETE can be retried safely; supply idempotency keys for POST when necessary.
  • Pagination and filtering: Provide cursor-based or offset-based pagination, with clear metadata for total counts and next cursors.

Design with backward compatibility in mind: deprecate endpoints with clear timelines, and prefer additive changes over breaking ones.

Authentication, authorization, and security considerations

Security is non-negotiable. Common, interoperable mechanisms include:

  • API keys: Simple and useful for identifying applications, but pair with TLS and usage restrictions.
  • OAuth 2.0: Industry-standard for delegated authorization in user-centric flows; combine with short-lived tokens and refresh tokens.
  • JWTs: JSON Web Tokens are compact bearer tokens useful for stateless auth; validate signatures and expiration, and avoid storing sensitive data in payloads.
  • Transport security: Enforce TLS (HTTPS) everywhere and use HSTS policies; mitigate mixed-content risks.
  • Rate limiting & throttling: Protect backends from abuse and accidental spikes; return clear headers that expose remaining quota and reset times.

Also consider CORS policies, input validation, and strict output encoding to reduce injection risks. Implement principle of least privilege for every endpoint and role.

Performance, observability, and tooling

Operational maturity requires monitoring and testing across the lifecycle. Focus on these areas:

  • Caching: Use HTTP cache headers (Cache-Control, ETag) and CDN fronting for public resources to reduce latency and load.
  • Instrumentation: Emit structured logs, request traces (OpenTelemetry), and metrics (latency, error rate, throughput) to diagnose issues quickly.
  • API specifications: Define schemas with OpenAPI/Swagger to enable client generation, validation, and interactive docs.
  • Testing: Automate contract tests, integration tests, and fuzzing for edge cases; run load tests to establish scaling limits.
  • Developer experience: Provide SDKs, clear examples, and consistent error messages to accelerate integration and reduce support overhead.

Tooling choices—Postman, Insomnia, Swagger UI, or automated CI checks—help maintain quality as the API evolves. For AI-driven integrations, exposing well-documented JSON schemas and stable endpoints is critical.

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What is REST and when should I choose it?

REST is ideal for resource-oriented services where standard HTTP semantics are beneficial. Choose REST when caching, simplicity, wide client compatibility, and predictable CRUD semantics are priorities. For highly dynamic queries, consider GraphQL as a complement rather than a replacement.

How do I manage breaking changes?

Version endpoints, use feature flags, and publish changelogs with migration guides. Prefer additive changes (new fields, new endpoints) and give clients time to migrate before removing legacy behavior.

What authentication method should I implement?

Match the method to the use case: API keys for server-to-server integrations, OAuth 2.0 for delegated user access, and JWTs for stateless session claims. Always layer these with TLS and short token lifetimes.

How should I handle rate limits and abuse?

Enforce per-key and per-IP limits, surface quota headers, and provide graceful 429 responses with a Retry-After header. Use adaptive throttling to protect critical downstream systems.

Which tools help maintain a healthy API lifecycle?

Adopt OpenAPI for specs, use Postman or Swagger UI for exploratory testing, integrate contract tests into CI, and deploy observability stacks (Prometheus, Grafana, OpenTelemetry) to monitor behavior in production.

Disclaimer

This article is for educational and technical guidance only. It does not constitute legal, security, or operational advice. Evaluate risks and compliance requirements against your own environment before implementing changes.

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