What is Liquid Collective?
The enterprise-grade liquid staking standard.
Liquid Collective is the secure liquid staking standard: a protocol designed to meet the needs of institutions, built and run by a collective of leading web3 teams. Liquid Collective will be governed in a decentralized manner by a broad and dispersed community of industry participants, with initial members that include The Liquid Foundation and other web3 industry teams.
Liquid staking is a rapidly growing technological solution for directly contributing to the security of proof of stake blockchains. Token holders stake their token and receive a receipt token (liquid staking token) as evidence of their ownership of their staked token. The liquid staking token can be transferred, stored, traded, and utilized in DeFi or supported dapps.
Whereas traditional methods of staking are subject to bonding and unbonding periods (ranging from days to weeks), liquid staking provides stakers with increased liquidity and capital efficiency.
The Liquid Collective protocol is a liquid staking protocol that includes:
- Software Components: a suite of smart contracts, built first on the Ethereum blockchain, and a set of off-chain applications and tools
- Service Providers: a set of agents that operate and ensure the protocol functions well
When a user deposits to the Liquid Collective protocol, they receive an equivalent liquid staking token that evidences their legal and beneficial ownership of the underlaying staked asset as well as any network rewards that accrue, minus protocol service fees and network slashing penalties, if any.
Other liquid staking solutions have focused on the needs of crypto-native stakers but have not met the requirements of many institutional and enterprise participants. The number of liquid staking protocols solving for staker liquidity has for the most part resulted in numerous, relatively illiquid liquid staking tokens that can only be utilized in certain corners of web3.
Liquid Collective seeks to solve these challenges by developing a protocol that is suitable for institutional stakers and that offers deep liquidity via a unified, standardized solution. Liquid Collective's objective is for this level of liquidity to result in the protocol's liquid staking tokens (e.g., LsETH) being the most adopted (and thus the most useful) staking receipt token in web3.
A few areas where the Liquid Collective protocol differs from existing solutions include:
- With Liquid Collective's enterprise-grade validator set, network rewards are generated by security-focused infrastructure providers.
- Initial node operators in the Liquid Collective, such as Coinbase Cloud, Figment, and Staked, operate multi-cloud, multi-region, and multi-client infrastructure.
- Multiple audits from leading security teams on all contracts deployed to mainnet.
- KYC/AML for users and operators facilitates compliance.
- API-first solution provides a frictionless onboarding path for Integrators.
- cToken design on Ethereum allows customers to control their network reward flow.
- LsTokens create a single user-friendly liquid staking token standard vs. the current “alphabet soup” of liquid staking tokens that exist in web3 today.
- An open system encourages composability of Liquid Collective's liquid staking token, unlocking numerous potential use cases.
- Liquid staking tokens require liquidity to gain mainstream adoption. Liquid Collective aims to become a standard through collaboration with industry leaders and for LsTokens to become the most utilized and adopted token standard in the industry.
- Platform-specific solutions have historically not gained traction relative to industry standards. The stablecoin market is a good example of this.
- Liquid Collective is collaborating with top teams on other blockchains to provide the native liquid staking solution on each network (i.e. Kiln for Ethereum, Acala for Polkadot, and Rome Blockchain Labs for Avalanche).
- Liquid Collective's mission to empower global participation in securing the decentralized internet involves collaborating with industry participants including trading venues, custodians, tech providers, and validators to build a liquid staking standard.