All You Need to Know About TON Liquid Staking

Maximize Rewards with Liquid Staking in the TON Ecosystem

Staking is a key decentralized finance (DeFi) solution on any Proof-of-Stake blockchain network. Currently, there is $3 billion worth of 550 million Toncoin staked within the TON ecosystem.

The high total value locked (TVL) in staking is due to its importance for network security, as well as the rewards provided by the protocol itself. This article will explain everything about TON staking, including how it works, what liquid staking is, and how to maximize rewards by using DeFi alongside liquid staking on TON.

What is Crypto Staking?

Blockchain networks are decentralized, meaning there isn’t a central server to process and store all transactions. Instead, blockchain networks rely on validators — independent participants who run their own servers to validate transactions, create blocks, and store transaction data. Currently, TON has over 370 validators.

To become a validator, one must stake at least 300,000 TON, locking the coins in a staking contract to obtain validator rights.

Where Do Staking Rewards Come From?

Validators earn staking rewards of 1.7 TON per block created and also collect transaction fees from those blocks. On average, active validators currently earn around 50,000 TON daily.

The amount staked by a validator affects their value in the network. A larger stake means more responsibilities and the potential to earn more staking rewards.

What is Liquid Staking?

Not all users can afford to stake 300,000 TON, but they still want to earn staking rewards. Liquid staking allows regular users to delegate smaller amounts of TON to validators and receive a share of the staking rewards.

Here’s how it works:

• Users deposit their TON into a liquid staking pool.

• The pool provides the TON to validators.

• Validators stake the additional TON, earning more rewards, and return both the staked TON and a share of rewards to the liquid staking pool.

This benefits both parties: users earn staking rewards without needing 300,000 TON or handling node maintenance, while validators increase their stake, earn more, and enhance TON network security. For instance, Tonstakers supplies validators with 34M TON, representing 5% of the total staked amount (593M TON at the time of writing).

Why is it Called "Liquid" Staking?

Users who participate in liquid staking receive Liquid Staking Tokens (LSTs). These tokens represent their share in the liquid staking pool, functioning similarly to staking receipts or liquidity provider (LP) tokens on decentralized exchanges.

How to Maximize Liquid Staking Rewards

The TON Foundation has recently launched an initiative to boost the utility and liquidity of liquid staking tokens by offering incentives for the largest LST pools on platforms like STON.fi and DeDust. Users who provide tsTON and stTON tokens to these pools can earn additional rewards.

For example, users can swap half of their tsTON (from Tonstakers) to USDT and provide both tokens to the STON.fi tsTON/USDT liquidity pool. This allows them to earn trading fees and stake their LP tokens in a farm to receive further rewards.

We support these initiatives and aim to introduce more TON users to liquid staking while also showing how they can maximize rewards within the TON ecosystem.

Why Should Users Consider Staking?

Liquid staking offers a stable and safe way to earn rewards in DeFi:

• Stakers receive rewards in TON, the most liquid asset in the TON ecosystem, which has a market cap of $13B.

• It avoids risks common in other DeFi protocols, such as impermanent loss on decentralized exchanges (DEXes) or liquidations in lending protocols. Some platforms, like Tonstakers, even protect users from slashing, which is a major staking risk.

• Stakers contribute to network security by increasing honest validators’ stakes.

• Users can also earn extra rewards by providing their liquid staking tokens to other DeFi protocols.

These benefits make liquid staking a safe and stable method for earning on-chain rewards, contributing to its billions of dollars in total value locked.