Staking is a key component of decentralized finance (DeFi) on any Proof-of-Stake (PoS) blockchain network. In the TON ecosystem, there is currently $3 billion worth of 550 million Toncoin staked.
The high Total Value Locked (TVL) in staking stems from its essential role in maintaining network security, as validators earn rewards directly from the protocol for their contributions. This article will walk you through how staking works in TON, explore liquid staking options, and demonstrate how to maximize your rewards using DeFi and the TON Stake app.
What is Crypto Staking? Blockchain networks are decentralized, meaning they don’t rely on a central server to handle transactions. Instead, they use validators — independent participants who operate their own servers to validate transactions, create blocks, and store data. There are over 370 validators in the TON network.
To become a validator, a participant must stake at least 300,000 TON, locking the tokens in a staking contract to gain validator rights.
Where Do Staking Rewards Come From? Validators earn staking rewards of 1.7 TON per block they create and also collect transaction fees from those blocks. On average, active validators earn 50,000 TON daily.
A validator’s stake influences their “value” in the network: the more TON they stake, the more tasks they can perform and the greater their staking rewards.
What is Liquid Staking? Many users don’t have enough TON to stake the minimum 300,000 but still want to earn staking rewards. Liquid staking protocols solve this by allowing users to delegate smaller amounts of TON to validators in exchange for a share of the rewards.
Here’s how liquid staking works:
- Users deposit their TON into a liquid staking pool.
- The pool then provides the deposited TON to validators.
- Validators stake the TON, earn rewards, and return the TON plus a share of the rewards back to the pool.
Liquid staking benefits all parties: users earn rewards without needing to meet the 300,000 TON minimum or manage nodes, while validators increase their stake, earn more rewards, and help secure the TON network. For example, Tonstakers provides 34 million TON to validators, which represents 5% of the total staked TON in the ecosystem.
Why is it Called “Liquid” Staking? Users who stake through liquid staking receive Liquid Staking Tokens (LSTs), which represent their stake in the liquid staking pool. These tokens act like staking receipts or LP tokens in decentralized exchanges.
To unstake, users exchange their LSTs for TON and any accumulated rewards. The LSTs hold clear value: 1 LST equals 1 TON plus any staking rewards. Additionally, these tokens can be used in other DeFi applications to earn further rewards.
How to Maximize Liquid Staking Rewards The TON Foundation has recently launched initiatives to enhance the utility and liquidity of liquid staking tokens by offering rewards to the largest LST pools on platforms like STON.fi and DeDust. By providing tsTON and stTON tokens to these pools, users can earn additional rewards.
For instance, users can exchange half of their Tonstakers tsTON for USDT, then place both tokens in the STON.fi tsTON/USDT liquidity pool to earn trading fees. They can also farm LP rewards by adding their liquidity pool tokens to the farm.
We support these initiatives and encourage more TON users to explore liquid staking and maximize their rewards in the TON ecosystem.
Why Should Users Consider Staking? Liquid staking offers a safe and stable way to earn rewards in DeFi:
- Users receive TON protocol rewards, which is the most liquid asset in the ecosystem, valued at a $13 billion market cap.
- Unlike other DeFi protocols that carry risks like impermanent losses or liquidations, staking has no such risks. Some services, like Tonstakers, also protect users from slashing, the only significant staking risk.
- Staking helps improve the overall security of TON by boosting the stakes of honest validators.
- With liquid staking, users can earn extra rewards by using their liquid staking tokens in other DeFi protocols.
These advantages make liquid staking a safe and stable option for earning on-chain rewards, contributing to billions in total value locked.