Cryptocurrency has shown the world several impressive ways to make money via liquidity mining on decentralized exchanges, lending platforms, staking, and of course trading/investing. However, staking has stood out as one of the simplest and least risky ways to make money from your cryptocurrency investments.
Staking cryptocurrency generally involves validators locking their tokens in a smart contract for a minimum time period (usually days) and block rewards are paid out to them. Everyone else stakes by delegating to existing validators and they receive a portion of the validators’ block rewards. This provides a passive income with a low barrier to entry (i.e. you only need to buy cryptocurrency).
You are also limited to the staking rewards provided by whichever network you are on. However, Persistence’s pSTAKE has changed that with liquid staking. pSTAKE uses smart contracts to provide users with wrapped tokens that equal the value of the tokens they staked 1:1. This enables users to stake tokens on one platform, and invest them on another platform to earn DeFi yields from loans, for example.
This means that you can simultaneously earn staking rewards + yields from lending out your tokens on another DeFi platform (for example: Ethereum). Without liquid staking you can only have one or the other, limiting your revenue generation potential.
These wrapped tokens are called wTOKENS, and they represent your unstaked tokens. Users can also opt to mint pTOKENS instead, which represent staked tokens. pSTAKE will launch with support for the Cosmos blockchain (ATOM) in early July.
This provides another example: Users will be able to stake their ATOM tokens and receive pATOM tokens which they can use to earn yields by providing liquidity on Ethereum DEXes.