BNB liquid staking offers a multitude of upsides. Not only do you get the rewards from the initial staked BNB, but it also improves upon the inefficiencies of staking in various ways.
Minimum Commitment Costs
Previously with staking, you could only stake if you had enough funds to set up your own node. Oftentimes the initial investment required can be tens of thousands of dollars. However, with liquid staking you can stake any amount, even if you don’t have much. For this reason, it makes the blockchain ecosystem much more inclusive. Anyone can receive considerable yields in DeFi networks for locking their BNB into the ecosystem.
Transfer of Risks to the Protocol You are Using
With delegated proof of stake you have the option to choose a validator node that you deem trusthworhty to not get slashed. It can be difficult to do your own research with delegated nodes. Fortunately, liquid staking takes this off your plate, because you hand all node slashing risk over to your protocol of choose (As can be seen at ANKR). Basically, this means that if a node that the protocol chose gets slashed, they’re the ones that have to cover the loss, not you!
Immediate Access to Liquidity / Yield-Earning Opportunities
The ability to use your BNB while it’s staked is perhaps the most significant benefit of liquid staking. Because your BNB remains liquid, you unlock the opportunity to earn yield through other DeFi lending strategies on top of that. These strategies range everywhere from liquidity mining & yield farming to lending your assets to protocols and vaults.
No Risk of Impermanent Loss
When lending assets to liquidity pools you run the risk of impermanent loss. This is a common risk of various yield earning strategies involving liquidity pools, but with liquid staking this isn’t something you have to worry about.
No Technical Knowledge Required
It’s as easy as making a swap. Unlike setting up validator nodes to stake which often requires extensive programming knowledge, liquid staking is as simple as swapping assets for liquid tokens. For example, on ANKR you simply exchange your BNB for aBNBb tokens and then voila, you just staked BNB.
Enhanced Decentralization
Most protocols will not only run the validator nodes for you, but also choose reliable validator nodes they trust. This decentralizes the network for everyone, by spreading the influence of the network to a large number of nodes. Which further decreases the potential for a single centralized party to influence transactions or build up to the infamous 51% attack.
Conclusion
All things considered, liquid staking is a low risk, medium reward DeFi investing strategy. Unlike complex yield-earning strategies, liquid staking is simple and doesn’t require any technical knowledge or entail risk of impermanent loss. You can start with however much you’re willing to invest and start receiving rewards immediately.
The rewards you’ll receive will most often be in the 4-10% range. Nothing huge, but again the higher the reward the higher the risk. Liquid staking is a reliable way and low risk approach to receiving additional rewards on your crypto assets through participating in the security of the BNB chainBSC network.
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