5 min readBasics

What Is Liquid Staking?

Unlock the power of staking without giving up liquidity. Learn how liquid staking works, how it compares to traditional staking, and how PlunderSwap is redefining DeFi on Zilliqa.

By PlunderSwap Team

What Is Liquid Staking?

Introduction to Liquid Staking

Liquid staking is a breakthrough innovation in decentralized finance (DeFi) that solves one of the biggest drawbacks of traditional staking: asset lock-up. With liquid staking, you don't have to choose between earning rewards and maintaining access to your crypto. You can stake your tokens to support network security and receive a tradable token in return—giving you the freedom to use your capital across DeFi protocols.

Traditional vs. Liquid Staking

Traditional Staking

  • Token Lock-Up: Staked tokens are tied up in a smart contract and cannot be accessed until unstaked.
  • No Utility: You can't use, trade, or repurpose staked assets.
  • Unbonding Delays: Withdrawing your stake usually comes with a waiting period, typically fourteen days.
  • Reward Generation: You earn staking rewards, but lose liquidity and flexibility.

Liquid Staking

  • Receive LSTs: When you stake, you get a Liquid Staking Token (LST), ours is pZIL, which represents your staked tokens.
  • Use It Anywhere: pZILs can be used in trading, lending, farming, or as collateral across DeFi platforms.
  • Continuous Rewards: Your pZIL appreciates in value as your staked tokens earn rewards.
  • Instant Exit: No need to wait: sell or swap your pZIL to exit your position at any time.

How Liquid Staking Works on PlunderSwap

PlunderSwap brings liquid staking to the Zilliqa ecosystem in a simple, user-friendly way:

  1. Stake ZIL: Deposit your ZIL into PlunderSwap's smart contract.
  2. Get pZIL: Receive pZIL, a 1:1 representation of your staked ZIL.
  3. Earn Yield: As your ZIL earns staking rewards, the value of your pZIL increases.
  4. Use pZIL: Trade it, lend it, provide liquidity, or farm with it across supported DeFi protocols.
  5. Unstake Anytime: Burn your pZIL to retrieve your original ZIL plus earned rewards.

Key Benefits

  • Dual Utility: Earn rewards and keep your funds liquid.
  • DeFi Ready: Integrate your pZIL into DeFi strategies across the ecosystem.
  • No Waiting Period: Exit when you want—just trade your pZIL.
  • Tax Efficiency: Rewards are reflected in pZIL's value, which may simplify reporting (consult your tax advisor).

Risks and Considerations

  • Smart Contract Risk: As with all DeFi, vulnerabilities exist despite audits.
  • Validator Risk: Poor validator behavior can lead to slashing, impacting rewards or principal.
  • Market Imbalance: pZIL may temporarily trade below its underlying value due to market forces.
  • Liquidity Constraints: Low pool liquidity can make large swaps inefficient or costly.
  • Regulatory Uncertainty: Laws are evolving—ensure compliance with local rules and tax obligations.

Final Thoughts

Liquid staking represents the next phase of staking innovation: combining security, yield, and utility. PlunderSwap allows Zilliqa users maximize their capital efficiency without compromising on network participation. It's staking reimagined for a DeFi-native world.

Ready to start liquid staking? Head to our staking page to begin your journey!