Staking and Liquid Staking on Sui: A Comprehensive Guide

Staking
plays
a
crucial
role
in
the
proof-of-stake
network
and
energizes
the
DeFi
ecosystem
built
upon
it,
according
to
The
Sui
Blog.
With
only
a
wallet
and
some
SUI,
users
can
participate
in
securing
the
network
and
earn
rewards
simultaneously.
Staking
can
be
done
directly
from
most
wallets
and
often
only
takes
a
few
clicks.
Within
seconds,
users
can
stake
SUI
and
start
earning
rewards
to
fuel
their
adventures
further
into
the
Sui
ecosystem.

What
is
staking?

Proof-of-stake
(PoS)
networks
use
a
process
called
staking
to
prevent
sybil
behavior
and
maintain
network
liveliness.
PoS
ensures
that
the
network
continues
to
operate
securely
even
if
a
significant
number
of
validators,
entities
that
participate
in
the
consensus
process,
become
unresponsive
or
collude.
PoS
requires
active
validators
to
have
a
significant
amount
of
SUI
staked,
creating
an
economic
incentive
that
aligns
with
the
long-term
success
of
the
network.
Staked
SUI
is
illiquid
until
unstaked
and
subject
to
penalty
if
sybil
behavior
is
clearly
observed
by
a
validator.

Any
user
can
participate
in
the
PoS
mechanism
to
help
secure
the
network
and
maintain
the
decentralized
nature
of
Sui.
Token
holders
can
stake
their
SUI
with
a
validator
and,
in
return,
earn
staking
rewards.
Staking
is
not
only
essential
to
the
network’s
security
but
also
serves
as
a
foundational
source
of
rewards
that
feeds
an
onchain
economy
such
as
Sui’s.
Staking
rewards
are
often
considered
one
of
the
more
stable
sources
of
rewards
and
are
foundational
for
DeFi
ecosystems.

How
to
stake

Any
general
wallet
app
should
offer
the
ability
to
stake
SUI.
This
example
will
show
how
a
user
can
stake
SUI
from
their
Sui
Wallet
account:

1. Within
   the
   wallet
   app,
   the
   portfolio
   section
   allows
   you
   to
   stake
   SUI,
   assuming
   you
   have
   SUI
   in
   your
   wallet.
   To
   begin,
   select
   ‘Stake
   and
   Earn
   SUI’.
2. Next,
   you
   must
   select
   a
   validator
   to
   stake
   with.
   A
   scrolling
   window
   will
   populate
   with
   all
   active
   validators
   in
   a
   random
   order,
   allowing
   you
   to
   browse,
   sort,
   and
   select
   validators.
   Validator
   details
   can
   be
   found
   on
   explorers
   such
   as
   SuiVision
   or
   Suiscan,
   and
   websites
   like
   Staking
   Rewards.
3. Once
   you’ve
   selected
   a
   validator,
   enter
   the
   amount
   of
   SUI
   you’d
   like
   to
   stake,
   assess
   the
   relevant
   information,
   and
   select
   ‘Stake
   Now’.
4. The
   staking
   transaction
   should
   complete
   very
   quickly,
   leaving
   you
   with
   a
   message
   that
   covers
   information
   relevant
   to
   the
   transaction.

What
is
liquid
staking?

Liquid
staking
is
an
innovative
solution
that
allows
users
to
stake
their
tokens
while
still
maintaining
liquidity.
Unlike
traditional
staking,
where
tokens
are
locked
up
for
a
specific
period,
liquid
staking
solutions
enable
users
to
receive
a
derivative
token
representing
their
staked
assets.
These
derivative
tokens
can
be
traded,
transferred,
or
used
in
other
DeFi
applications,
providing
flexibility
otherwise
impossible
with
staked
assets.
Liquid
staking
tokens
(LSTs)
offer
the
benefits
of
earning
staking
rewards
with
the
ability
to
stay
liquid
and
participate
in
DeFi
activities.

There
are
currently
three
liquid
staking
solutions
available
in
the
Sui
ecosystem:
afSUI,
haSUI,
and
vSUI.
Liquid
staking
solutions
differ
primarily
in
the
selection
of
validators
and
the
reward
distribution
method.
While
some
liquid
staking
solutions
allow
users
to
select
a
specific
validator
to
stake
with,
others
may
disperse
staked
SUI
to
a
subset
of
the
active
validators,
further
helping
to
reduce
centralization
of
staked
SUI
on
any
one
validator.
For
example,
using
Haedal,
users
can
select
a
specific
validator
or
choose
to
stake
with
a
selected
subset
of
validators,
with
inclusion
criteria
found
in
their
documentation.

It
is
important
to
consider
what
you
want
from
a
liquid
staking
solution
and
research
which
provider
offers
what
you
prefer.

How
to
access
LSTs

There
are
two
common
ways
to
access
LSTs:
1)
Stake
SUI
directly
through
the
liquid
staking
solutions
app,
or
2)
purchase
the
LST
from
a
DEX.

The
liquid
staking
solutions
have
their
own
apps
where
users
can
simply
connect
their
wallet,
choose
the
amount
to
liquid
stake,
select
their
validator
preferences
(if
available),
and
stake.
This
gives
users
an
easily
accessible
location
where
they
can
complete
all
actions
around
liquid
staking.

The
second
option
is
to
simply
buy
LSTs
from
a
DEX.
This
option
gives
users
the
convenience
to
access
LSTs
from
an
app
they
may
frequently
use.
DeFi
users
interact
with
DEXes
regularly
and
may
find
it
more
seamless
to
simply
purchase
LSTs
from
a
DEX
that
they
are
already
familiar
with.

Continuing
the
journey

Staking
is
more
than
just
a
way
to
earn
rewards;
it’s
often
a
user’s
first
step
to
active
participation
in
Sui.
By
choosing
the
right
staking
approach
for
your
needs,
you
not
only
earn
staking
rewards
but
also
help
to
decentralize
and
secure
the
network
as
a
whole.
Understanding
liquid
staking
and
how
to
access
LSTs
allows
you
to
plan
the
next
steps
in
your
journey
within
Sui
with
a
strong
understanding
of
a
foundational
element
of
an
onchain
economy.

Note:
This
content
is
for
general
educational
and
informational
purposes
only
and
should
not
be
construed
or
relied
upon
as
an
endorsement
or
recommendation
to
buy,
sell,
or
hold
any
asset,
investment,
or
financial
product
and
does
not
constitute
financial,
legal,
or
tax
advice.

Image
source:
Shutterstock