👋Liquid Stacking
This documentation explains what liquid stacking is, gives a comprehensive overview of the technical options for building a liquid stacking solution on Stacks and discusses potential tokenomics.
Attention: Nothing discussed in this documentation should be considered legal or financial advice and is written for informational purposes only.
Overview
The idea of liquid stacking (or more often used, liquid staking) is not new. Several blockchains in the wider ecosystem have implemented liquid stacking/staking tokens (LSTs) or liquid stacking derivatives (LSDs). Both LST and LSD refer to the same concept in this case, meaning a token which represents a locked up stake plus the auto-compounded yield generated by this stake. Popular blockchain ecosystems such as Ethereum and Solana have adopted protocols such as Lido, Rocketpool, Frax and Marinade Finance.
In other words, locking up tokens in Proof-of-Stake (PoS) results in locking up the liquidity behind that token which reduces its usability in other apps or protocols, since your principal lockup is not accessible by default. As a solution, ecosystem developers have built liquid staking solutions. In its most abstract and high-level form, these solutions allow you to stake a token (earning staking yield), after which the protocol gives you a new derived token that represents that stake. The protocol will stake the token for you and keep track of the token principal (i.e. what the user initially deposited) and the yield that is being accrued. Depending on the actual implementation of the LST, the yield might be auto-compounded and staked as well, or can be redeemable by the user (potentially after queuing in a withdrawal queue).
In what follows, we will take a deeper look at liquid stacking on the Stacks blockchain and how Proof-of-Transfer (PoX) can be leveraged to build a liquid stacking solution. Several technical designs and potential use cases will be discussed. The project's aim is to provide an LST that simplifies the stacking user experience (UX) for the end-user and provides an easier and automated way to earn yield on the STX token by using the LST protocol.
Getting Started
We've put together some helpful sections together to browse the documentation depending on your interests.
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