Staking & Liquid Staking Key Considerations
There are a few key considerations worth mentioning regarding Staking & Liquid Staking:
- Passive Income from Staking Rewards: Users earn rewards for staking, with higher returns for validators but lower technical complexity for delegated stakers. Validators take a small commission in return for providing staking services.
- Liquidity Lock-up Periods: Traditional staking locks funds, making them inaccessible for a set period (e.g., Ethereum’s 32 ETH staking requirement).
- Smart Contract & Protocol Risk: Liquid staking protocols rely on smart contracts, which can be vulnerable to exploits, governance failures, or depegging risks.
- Slashing Risk: Validators can be penalized for poor performance, potentially impacting stakers relying on them.
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