A Guide to Native Staking vs. Liquid Staking vs. Liquid Restaking

With over 33 million Ethereum (ETH) staked as of July 2024, staking has become a popular way for cryptocurrency holders to earn passive income while supporting the security and functionality of blockchain networks. However, traditional or native staking has one significant drawback — it locks up your assets, meaning you can't access them while they're staked. This is where liquid staking comes into play, offering a solution that maintains liquidity. Taking it a step further, there's liquid restaking, an even more advanced option. 

This article breaks down the key differences and similarities between native staking, liquid staking and liquid restaking, helping you understand how each method works and which might be the best fit for your investment strategy.

Key Takeaways:

• With over 33 million ETH currently staked, cryptocurrency holders are increasingly using staking to earn passive income while supporting blockchain networks.

• Native staking involves locking up cryptocurrency tokens within a blockchain to earn rewards, contributing to the network’s security and integrity.

• Liquid staking allows users to stake their tokens, while maintaining liquidity, through liquid staking tokens (LSTs), which can be traded or used in DeFi applications.

• Liquid restaking is a more advanced strategy that involves leveraging tokenized staked assets across multiple DeFi protocols to maximize rewards and enhance profitability.

• Choosing the best staking approach between native staking, liquid staking and liquid restaking depends upon individual priorities, such as control, liquidity, complexity and potential returns.