What Is Liquid Staking (Fantom)?
Liquid staking on the Fantom network enables token holders to participate in the proof-of-stake consensus and earn rewards.
This process is facilitated by the Proof of Liquid Staking (PoLS) algorithm.
PoLS is a variation of Proof of Stake (PoS) where a single validator can stake tokens on behalf of multiple delegators, acting as a proxy for multiple accounts.
This allows users with small balances to participate in staking and offers more flexibility than traditional PoS algorithms.
Enhancing Staking Liquidity
With liquid staking, validators can delegate their Fantom (FTM) token balance to a Staking Service Provider or another entity and still receive some staking rewards.
This delegation model is similar to how miners delegate hash power to mining pools in traditional proof-of-work systems.
By locking their FTM tokens on an Ethereum smart contract, delegators provide liquidity for the network and receive Liquidity Rewards (L-Reward) proportional to their contribution.
Validator pools stake these liquid tokens and collect Staking Rewards (S-Reward) based on consensus rules, total stake size, and validator performance.
Addressing Scalability
Fantom is a DAG-based smart contract platform that has addressed scalability issues by implementing an asynchronous network.
Unlike traditional blockchain networks, where each node must wait to complete the previous transaction, Fantom’s Lachesis consensus algorithm allows for concurrent processing, enabling higher transaction throughput.
Earning Rewards
The liquid staking process on Fantom involves staking FTM tokens in your wallet, moving them to another wallet or exchanging them for other assets, and unstaking them if desired after a waiting period.
Lachesis eliminates the need for validators to hold the staked asset, as the consensus relies on randomly selected active nodes.
By participating in liquid staking on Fantom, users earn rewards for holding their tokens and contribute to the network by ensuring an adequate number of active nodes for consensus.