Top 5 Liquid Staking Platforms With Highest Yields

Crypto staking is one of the best ways to earn passive income, and liquid derivates offer particularly attractive staking opportunities. 

Since the merge in September 2022, Ethereum comprises two parallel blockchains: the Execution layer which contains all of Ethereum’s transaction data, and the Consensus layer (or the Beacon Chain) which consists of a network of validators that determine the validity of transactions. 

Staking means creating one or more validators on the Beacon Chain to help secure the Ethereum network. Validators verify new transactions and vouch that the proposed block contains legal and valid transactions. 

To prevent malicious acts from validators, each validator is required to lock 32 ETH up as a “stake” in the network. If validators perform their duties correctly, they earn rewards; if they attempt to attack the chain, they lose some of their staked funds. 

To sum up, solo ETH staking requires the technical knowledge to set up and run a validator node, as well as a whopping 32 ETH. 

Liquid staking derivatives offer a much simpler way to accrue staking rewards. They allow anyone to participate in staking pools which removes the need to run validator nodes and lets users stake any amount of ETH. 

These platforms also offer a high degree of flexibility. First, in return for staked ETH, users receive a tokenized version of their funds. These tokens can be used on other DeFi protocols as collateral for loans and yield farming and can thus earn additional yield. And second, they let users withdraw their staked ETH and rewards at any time and of any size. 

In this post, we’ll go over the top 5 Liquid Staking Platforms that currently offer the highest APR (Annular Percentage Rate). 

1. Frax 

Frax Finance, the issuer of the FRAX stablecoin, has entered the liquid staking market with the launch of its Staked Frax Ether (sfrxETH) token. 

sfrxETH has quickly gained traction and accounts today for over 2% of the LSD market. A TVL of $350 million makes it the fourth-largest LSD project. 

Frax’s liquid staking system uses 2 tokens: frxETH, which is a stablecoin loosely pegged to ETH and represents the underlying ETH deposit, and sfrxETH, which accumulates staking rewards. 

All profit generated by Frax validators is distributed to sfrxETH holders. By exchanging frxETH for sfrxETH, users become eligible for staking rewards, which are redeemed upon converting sfrxETH back to frxETH. 

This approach improves capital efficiency for Frax ETH holders by allowing them to use frxETH in DeFi protocols to produce additional yield. 

sfrxETH is presently yielding an estimated 9.25% APR, which makes it the most profitable liquid staking token. 

Staking through Frax Finance is simple. Start by minting frxETH tokens. Then you can stake them by swapping them for sfrxETH. Get more information from the Frax documentation. 

2. StakeWise 

StakeWise is another simple and effective Ethereum staking provider. It offers its StakeWise Pool in which users can pool their staked ETH with others and accrue rewards. 

The pool consists of a network of validators run by StakeWise. For every 32 ETH that users collectively deposit in the pool, StakeWise creates a new validator and adds it to the network. The rewards generated by these validators are distributed among users proportionally to their share of ETH in the pool. 

StakeWise also works with two tokens: sETH used for staking, and rETH used to pay out rewards. 

Deposits into the pool are tokenized into sETH2 on a 1:1 basis. The staking rewards, on the other hand, are represented by the rETH2 token. The rewards are distributed starting 24 hours after the initial staking deposit. 

To stake on StakeWise swap ETH for sETH on its staking app. There is no minimum amount of ETH that you can stake on StakeWise. Learn more from its documentation page. 

Right now, StakeWise has 1% of the LSD market share. $164 million worth of assets locked in its protocol makes it the fifth-largest project in its category. 

StakeWise currently offers an 8.86% APR and charges a 10% fee on the rewards earned by the Pool. 

3. Ankr 

Ankr Staking offers Ethereum token holders the opportunity to stake ETH and in return claim Ethereum Liquid Staking tokens - ankrETH. 

To stake ETH on Ankr, swap ETH for ankrETH. You can see your staked tokens on the Ankr dashboard. AnkrETH represents your staked ETH and provides liquidity for your staked position. Learn more from the Ankr documentation. 

All staking rewards are included in the ankrETH token price which grows daily in value but doesn’t grow in number. 

Besides ETH, you can stake other tokens on Ankr, such as MATIC, BNB, FTM, AVAX, and DOT. There is no minimum amount of ETH you can stake. 

The platform offers the highest APR for DOT staking, but the TVL of its Polkadot Pool is very low, making it a lot riskier. The APR for ETH staking is currently 6.59%. 

Ankr has a 0.52% LSD market share and a TVL of $85 million which places it in the 7th place among LSD platforms. 

4. Lido 

Lido Finance is by far the largest LSD provider with a market share of almost 75% and a TVL of over $12 billion. 

It lets you stake ETH, MATIC, and SOL via its staking pools. The highest APR - 6.4% - is for ETH staking. 

To stake ETH on Lido, you simply connect your wallet to its platform and swap your ETH for stETH. The conversion ratio is 1:1, so for 2 staked ETH, for example, you will receive 2 stETH. 

You can stake any amount of ETH. As with other liquid staking platforms, your staking tokens can be used in other DeFi protocols to earn additional yields. 

Users can provide liquidity in stETH in the stETH/ETH liquidity pool on Curve and the wstETH/ETH MetaStable pool on Balancer v2. 

Find more information on the Lido docs page. 

5. Rocket Pool 

Rocket Pool is the 3rd largest LSD provider with a TVL of $1.18 million and a market share of 7.13%. 

It offers a non-custodial decentralized network of node operators that earn rewards for rETH holders. On RocketPool, funds are never in the custody of node operators. Any penalties incurred by node operators are taken from their earnings and not from rETH holders. 

Users must deposit a minimum of 0.01 ETH to receive the rETH liquid staking token in return. rETH accrues staking rewards over time and has approximately the same value as ETH. 

To stake ETH on Rocket Pool, connect your wallet to its staking app and swap your ETH for rETH. You can read detailed instructions on the docs page. 

Rocket Pool currently has a 5.17%. APR. 

Bottom line 

Liquid staking is an effective, beginner-friendly, and relatively low-risk way to earn passive income on your crypto assets. 

Liquid staking platforms offer several advantages: from relatively high APR to low staking requirements with zero technical knowledge and the possibility to withdraw your money whenever you want.