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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🚀 Token Metrics API Goes Live on Hacker News – The AI Crypto Toolkit for Builders

Token Metrics Team
5 min
MIN

The Token Metrics API has officially launched on Hacker News, marking a major milestone in our mission to bring AI-powered crypto insights to every developer, founder, and builder in the Web3 space.

If you're building trading bots, dashboards, investment tools, or AI agents that interact with the crypto market, this is your developer edge in 2025. Forget raw feeds and static charts—this is real-time, AI-grade crypto intelligence available in minutes via a single API key.

What Is the Token Metrics API?

The Token Metrics API is a powerful crypto intelligence engine built for developers who want more than just price data. It combines machine learning, quantitative modeling, and narrative indexing to deliver structured signals that help users make smarter trading decisions.

Instead of simply showing what the market did, the API helps predict what it might do—with insights like:

  • Trader & Investor Grades (0–100 scores on momentum and fundamentals)
  • Bullish/Bearish Signals across 6,000+ assets
  • Narrative-based Indices like DeFi, AI, Memes, RWAs, and more
  • Quantitative Risk Scores and sentiment analysis
  • Real-time updates, no lag, no stale metrics

It’s like giving your crypto bot a brain—and not just any brain, an AI-trained crypto analyst that never sleeps.

Why It’s Different from Every Other Crypto API

Most APIs give you prices, volume, and maybe some on-chain data. Token Metrics gives you opinionated intelligence derived from over 80 on-chain, off-chain, technical, and sentiment indicators.

That means:

  • Your dashboard users get real-time grades and trending tokens.
  • Your AI agent can speak fluently about token fundamentals.
  • Your bot can act on bullish flips before the rest of the market.

We’ve designed this API for modularity and plug-and-play usability. With 21+ endpoints and official SDKs, you can ship faster and smarter—no custom pipeline needed.

What Can You Build?

Whether you're a solo developer or building inside a Web3 team, the possibilities are wide open.

Build smarter with Token Metrics if you’re creating:

  • 🧠 AI trading agents that query real-time token grades
  • 📊 Investor dashboards that surface top-rated altcoins
  • 📈 DApps that alert users to sector momentum shifts
  • 📱 Mobile apps with embedded market signals
  • 🧪 Backtesting systems for narrative-based portfolio strategies

Because the API supports OpenAI, Claude, Cursor, and Raycast integrations, your agents and LLM-powered tools can query live crypto intelligence in natural language—no additional parsing required.

Why the Hacker News Feature Matters

Token Metrics API just made it to the front page of Hacker News, one of the internet’s most trusted platforms for discovering high-impact developer tools.

This means:

  • 💬 A community of builders and engineers is already testing the API
  • 🧪 Feedback is pouring in, helping us evolve faster
  • 🚀 Your early adoption puts you ahead of the curve

If you’ve been waiting for the right time to integrate AI-native crypto signals into your product—this is it.

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Research

Bullish or Bearish? Interpreting AI Signals in Today’s Volatile Crypto Market

Token Metrics Team
5 min
MIN

Introduction

Crypto moves fast — and traders who can't read the signs get left behind. But in a market where emotions dominate, how do you distinguish between a real trend and a fakeout? That’s where AI-powered trading signals come in.

Token Metrics AI monitors over 6,000 tokens using 80+ data points, from technical momentum to on-chain activity and social sentiment. Its bullish and bearish signals aren’t just flashes of color — they’re actionable, data-driven insights that can guide decisions in chaotic markets.

In this post, we break down how to interpret bullish and bearish signals, what they’ve been saying recently, and how to react when market direction flips suddenly.

What Are Bullish and Bearish Signals?

Let’s start with the basics:

  • Bullish Signal (Green Dot): Indicates that a token is showing signs of an upward trend based on combined technical, sentiment, and on-chain analysis.
  • Bearish Signal (Red Dot): Suggests that a token is losing momentum, and price downside or stagnation is likely.

But these signals aren’t standalone — they come with contextual grades, like the Trader Grade, which ranks signal strength from 0 to 100. This allows you to not just know the direction, but the confidence behind it.

What Happened Recently? The May 30 Flip

On May 30, 2025, Token Metrics AI issued a broad bearish flip across much of the market. That included:

  • Ethereum
  • Bittensor
  • Launchcoin
  • Many Real World Asset and L2 tokens

The AI signal flipped red, and Trader Grades fell across the board. Why? Here's what the AI detected:

  • Slowing volume
  • Negative sentiment shift
  • Liquidity thinning on DEXs
  • On-chain accumulation stalling

This wasn’t panic-driven — it was a data-driven, proactive warning that the cycle had peaked. In a world where most traders rely on lagging indicators or Twitter sentiment, this was an edge.

How to Interpret a Bullish Signal

A bullish signal isn’t an instant “buy” — it's a call to investigate. Here's what to check when a green dot appears:

✅ 1. Trader Grade Above 80

This means high conviction. If it's between 60–79, the trend is forming, but may lack strength.

✅ 2. Volume Confirmation

Price up + volume up = good. Price up + volume flat = caution.

✅ 3. Narrative Alignment

If the token fits a hot theme (like RWAs or AI), that adds strength to the signal.

✅ 4. Recent Price Action

Did the signal appear after a breakout, or just before? Entry timing depends on whether you're catching the beginning or chasing the middle of the trend.

✅ 5. Compare to Peers

If 3–5 similar tokens are also turning bullish, that indicates sector-wide rotation — a better entry environment.

How to Interpret a Bearish Signal

Red doesn’t mean "dump immediately" — it means it's time to tighten your risk.

❗ 1. Trader Grade Below 50

This indicates deteriorating conviction — exit or reduce exposure.

❗ 2. Volume Divergence

If price is flat but volume is fading, that’s a warning of a potential breakdown.

❗ 3. Signal Timing

Did the bearish flip happen near local highs? That’s often the best exit point.

❗ 4. Check for Repeats

Was this the second red dot in a week? That could confirm a longer-term downtrend.

❗ 5. BTC/ETH Context

If Bitcoin or ETH also flip bearish, it may suggest macro pressure, not just token-specific weakness.

Real-Time Examples from the Webinar

During the June 5 Token Metrics webinar, we walked through examples of how these signals worked in real time:

🟢 Bullish (April) – Launchcoin

Strong signal, grade in the 80s. Resulted in a massive short-term run.

🔴 Bearish (May 30) – Ethereum

Signal turned red around $3,490. Traders who followed it avoided the 55% drawdown that followed.

🔴 Bearish (June) – Fartcoin

After a 700% run-up, the signal flipped bearish with a low Trader Grade of ~24. Result? A slow bleed lower as sentiment cooled.

What Makes AI Signals Different from Traditional TA?

Feature                                                    Token Metrics AI                     Traditional TA

Combines social + on-chain                    ✅                                       ❌

Updated in real time                                 ✅                                       ❌

Machine learning trained on past data   ✅                                       ❌

Outputs confidence grade                       ✅                                       ❌

Adapts to new narratives                         ✅                                       ❌

This isn’t about moving averages or MACD — it’s about combining the entire digital footprint of a token to anticipate what comes next.

How to React to a Signal Flip

What do you do when your favorite token suddenly flips from bullish to bearish?

  1. Reduce exposure immediately — even if you don’t sell everything, cut risk.
  2. Check the Grade — if it’s falling, momentum is likely over.
  3. Watch Peer Tokens — if similar projects are also turning red, it confirms sector rotation.
  4. Set New Alerts — if the signal flips back to green, be ready to re-enter.

Your job isn’t to predict the market. It’s to respond to what the data is saying.

How to Combine AI Signals with a Strategy

Here’s a basic framework:

Entry

  • Bullish signal + Trader Grade > 80 = enter with full size.
  • Grade 60–79 = enter small or wait for confirmation.

Exit

  • Bearish signal = scale out or exit.
  • Grade < 50 = no new positions unless for short trades.

Risk

  • Position size scales with grade.
  • Only trade tokens with high liquidity and volume confirmation.

This keeps your system simple, repeatable, and data-driven.

Conclusion

In volatile markets, conviction matters. Token Metrics AI doesn’t just point up or down — it tells you how strong the trend is, how likely it is to last, and when it’s time to pivot.

Don’t trade on emotions. Don’t chase hype. Use the signals — and trust the grade.

Because in a market that never sleeps, it pays to have an AI watching your back.

Research

Crypto Market Cools Off: What Is Token Metrics AI Saying Now

Token Metrics Team
5 min
MIN

Introduction

The euphoria of April and May in the crypto market has officially hit the brakes. While traders were riding high just weeks ago, the mood has shifted — and the data confirms it. Token Metrics’ proprietary AI signals flipped bearish on May 30, and since then, the market has been slowly but steadily declining.

In this post, we break down what’s happened since the bearish signal, how major altcoins and sectors are reacting, and what Token Metrics’ indicators are telling us about what might come next.

The Big Picture: Cooling Off After a Hot Q1 and Q2 Start

The platform’s AI signal turned bearish on May 30 when the total crypto market cap hit $3.34 trillion. Since then, the momentum that defined early 2025 has reversed.

This wasn’t a sudden crash — it’s a slow bleed. The signal shift didn’t come from headline-driven panic, but from data-level exhaustion: volume softening, sentiment stalling, and trend strength fading across most tokens.

Token Metrics AI recognized the shift — and issued the warning.

What the Bearish Signal Means

The AI model analyzes over 80 metrics across price, volume, sentiment, and on-chain data. When key trends across these data sets weaken, the system flips from bullish (green) to bearish (red).

On May 30:

  • Trader Grades across most tokens declined
  • Signal sentiment flipped bearish
  • Momentum and velocity cooled down

According to the model, these were signs of a broad de-risking cycle — not just isolated weakness.

Sectors Showing Declines

Even tokens that had been performing well throughout Q2 began to stall or roll over.

🚨 Launch Coin

Previously one of the top performers in April, Launch Coin saw its grades decrease and price action softened.It may even be rebranding — a typical signal that a project is pivoting after a hype cycle.

🏦 Real World Assets (RWAs)

RWAs were hot in March–May, but by early June, volume and signal quality had cooled off significantly.

🔐 ZK and L2s

Projects like Starknet and zkSync, once dominant in trader attention, have seen signal strength drop, with many now scoring below 70.

The cooling effect is broad, touching narratives, sectors, and high-performing individual tokens alike.

The Bull-Bear Indicator in Action

One of the key tools used by Token Metrics is the Bull vs. Bear Indicator, which aggregates bullish vs. bearish signals across all tokens tracked.

As of early June:

  • The percentage of tokens with bullish signals dropped to its lowest since January.
  • New projects launching with strong grades also saw a decline.
  • Even community-favorite tokens began receiving “exit” alerts.

This isn’t fear — it’s fatigue.

How Traders Are Reacting

During the webinar, we noted that many users who rely on Token Metrics signals began rotating into stables once the May 30 signal flipped. Others reduced leverage, paused entries, or shifted into defensive plays like ETH and BTC.

This reflects an important philosophy:

"When the data changes, we change our approach."

Instead of trying to fight the tape or chase rebounds, disciplined traders are using the bearish signal to protect gains and preserve capital.

What About Ethereum and Bitcoin?

Even ETH and BTC, the two bellwether assets, aren’t immune.

  • Ethereum: Lost momentum after a strong May push. Its Trader Grade is dropping, and the AI signals currently reflect neutral-to-bearish sentiment.
  • Bitcoin: While still holding structure better than altcoins, it has also declined since peaking above $72k. Volume weakening and sentiment falling suggest caution.

In previous cycles, ETH and BTC acted as shelters during altcoin corrections. But now, even the majors show weakness — another reason why the bearish flip matters.

What Could Reverse This?

Abdullah Sarwar, head of research at Token Metrics, mentioned that for the signals to flip back bullish, we would need to see:

  • Increased momentum across top tokens
  • New narratives (e.g., real-world utility, cross-chain demand)
  • Higher volume and liquidity inflows
  • Positive macro or ETF news

Until then, the system will remain in defensive mode — prioritizing safety over chasing trades.

How to Act During a Bearish Signal

The team offered several tips for traders during this cooling-off period:

  1. Reduce exposure
    Don’t hold full positions in assets with weak grades or bearish signals.

  2. Watch signal reversals
    Keep an eye on sudden bullish flips with high Trader Grades — they often mark trend reversals.

  3. Rebalance into safer assets
    BTC, ETH, or even stables allow you to sit on the sidelines while others take unnecessary risk.

  4. Use Token Metrics filters
    Use the platform to filter for:

    • Top tokens with >80 grades
    • Signals that flipped bullish in the last 3 days
    • Low market-cap tokens with strong on-chain activity

These tools help find exceptions in a weak market.

Conclusion: Bearish Doesn’t Mean Broken

Markets cycle — and AI sees it before headlines do.

Token Metrics' bearish signal wasn’t a call to panic. It was a calibrated, data-backed alert that the trend had shifted — and that it was time to switch from offense to defense.

If you’re navigating this new phase, listen to the data. Use the tools. And most importantly, avoid trading emotionally.

The bull market might return. When it does, Token Metrics AI will flip bullish again — and you’ll be ready.

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