FAQs
What is liquid staking?
Liquid staking allows users to stake their proof-of-stake (PoS) assets while also receiving a liquid representation of those assets. This enables users to earn staking rewards while having the flexibility to use their staked assets in other ways, such as trading or participating in decentralized finance (DeFi) protocols.
How does Milkomeda Liquid Staking work?
Milkomeda Liquid Staking is a decentralized standard that allows users to participate in a staking protocol while maintaining custody of their funds and receiving a yield baring tokenized representation of those funds. In the case of Cardano, users can stake their mADA (tokenized representation of ADA) to receive stMADA, which accrues layer 1 staking rewards.
Why would someone choose liquid staking over traditional staking?
Liquid staking provides flexibility, as it allows users to stake their assets and still have access to their funds for other purposes, such as trading or participating in decentralized finance (DeFi) protocols.
Liquid staking vs traditional staking many times refers to chains where the staked assets cannot be used, like in Ethereum for example. In the case of Cardano, staked (or delegated) assets do remain usable, but here Milkomeda Liquid Staking refers to the fact that assets can be used on the Layer 2 while being staked on the Layer 1 (Cardano Mainnet)
What are the benefits of using Milkomeda Liquid Staking?
- Liquidity: With Milkomeda Liquid Staking, users receive liquid stMADA tokens, allowing them to use their staked MADA in various DeFi applications or trade it on exchanges.
- Continuous Earnings: Users earn staking rewards in the form of additional stMADA tokens.
- Auto Compounding rewards: Supercharge your rewards through automatic compounding on Mainchain, unlocking even greater returns from your staking efforts
How are staking rewards distributed with Milkomeda Liquid Staking?
Milkomeda distributes staking rewards proportionally to stMADA holders based on their stake in the protocol (represented in shares). These rewards are automatically added to the user's balance over time.
Is Milkomeda Liquid Staking audited?
Yes. The audit report can be viewed here
Can I still use my staked assets?
Yes, when staking you will receive a token, stMADA, representing your stake and more and more protocols should support it going forward.
How can I unstake my assets from Milkomeda Liquid Staking?
You assets can be unstaked at any time throught the Milkomeda Liquid Staking frontend.
What are the benefits of enabling ongoing rewards beyond Layer 1?
Enhanced User Retention: By extending rewards to Layer 2 solutions, users have a continuous incentive to remain actively engaged with the blockchain ecosystem. This boosts user retention and encourages ongoing participation and contribution to the network.
Increased Developer Incentives: Adoption of Layer 2 by dApps can utilize the rewards earned on Layer 1, providing an additional revenue stream for developers. This fosters a vibrant environment for building and maintaining innovative solutions on top of the Layer 2 infrastructure.
Boosted Activity and Transaction Volume: As users continue to stake their assets and earn rewards on different layers of the blockchain, the protocol experiences heightened activity and transaction volume. This, in turn, contributes to potential revenue generation for the entire ecosystem.
Please note that this FAQ provides a general overview and may not cover all aspects of liquid staking.