Gradient Documentation
  • Introduction to Gradient
  • Preface
    • Purpose and Scope of This GitBook
    • How to Use This GitBook
  • Introduction to Liquid Staking
    • What is Liquid Staking?
    • The Importance of Liquid Staking in DeFi
    • Overview of Liquid Staking Tokens (LSTs)
  • The TAO Network and Bittensor
    • Introduction to the TAO Network
    • Bittensor: A Revolution in AI through Blockchain
    • Proof of Intelligence (PoI): A New Consensus Mechanism
    • Operation of the Bittensor Platform
    • Bittensor Use Cases
    • Advantages of Bittensor
  • The Gradient Protocol
    • Overview of Gradient
    • Key Features and Innovations
      • Incentivisation through GDT Tokens
      • The Role of GDT Token and swTAO
      • Seamless Staking Mechanism
      • Bridging the Worlds of Ethereum and the TAO Network
    • Tokenomics
    • Conclusion
  • Technical Architecture
    • Layer 1: The Blockchain
    • Security Protocols
    • Interoperability
    • Layer 2: The AI Integration Layer
    • Layer 3: User Interface and Interaction
    • Conclusion
  • Staking with Gradient
    • Introduction to Staking on Gradient
    • How to Stake wTAO on Gradient
    • Understanding swTAO: Benefits and Use Cases
    • Rewards and Incentives for Stakers
    • Conclusion
  • The TAO Bridge
    • Introduction to the TAO Bridge
    • How the Integrated Bridge Works
    • Use Cases and Advantages
    • Technical Implementation
    • Conclusion
  • Participating in the Gradient Ecosystem
    • Introduction
    • Becoming a Validator or Delegator
    • Governance and the Role of the GDT Token
    • Building on Gradient: Opportunities for Developers
    • Conclusion
  • Security and Risk Management
    • Introduction
    • Security Measures in Gradient
    • Understanding the Risks
    • Conclusion
  • Future Roadmap and Developments on the TAO Network
    • Introduction
    • Enhancements and Innovations
    • User Experience and Accessibility Improvements
    • Strengthening the TAO Network Connection
    • Vision for Gradient on the TAO Network
    • Conclusion
  • Getting Started with Gradient
    • Introduction
    • Setting Up Your Wallet for wTAO and GDT
    • Staking wTAO with Gradient
    • Accessing and Using the Tao Bridge
    • Participating in Governance and the Gradient Community
    • Conclusion
    • Glossary of Terms
    • Frequently Asked Questions (FAQ)
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  1. Introduction to Liquid Staking

Overview of Liquid Staking Tokens (LSTs)

The LSTs (Liquid Staking Tokens) themselves – which are fungible and liquid DeFi tokens that mirror the underlying assets – are backed on a 1:1 ratio by this collateral, while also carrying the right to staking rewards generated from that collateral.

Key Features of LSTs:

  • Liquidity: LSTs are traded, sold, or offered as collateral on DeFi protocols, giving stakers liquidity.

  • Interoperability: To satisfy open standards like ERC-20, which is for Ethereum-based projects, and then being traded and inter-operating natively on different DeFi platforms.

  • Distributing rewards: LSTs can enable users of the given L3 protocol to receive a portion of staking rewards, which are often either distributed directly to holders’ wallets or to the protocol in which they are staking their tokens.

  • Flexibility: Delegators can liquidate their staking positions whenever they like by selling their LSTs, not having to wait through entire unbonding periods.

The Role of Liquid Staking in Enhancing Blockchain Ecosystems

By unlocking the valuable liquidity constraint, liquid staking increases participation in decentralized blockchain ecosystems, ensures the security of blockchain networks and enhances the growth of DeFi as a whole. At the same time, it incentivises more users to participate in staking and optimizes the utilization of capital within the blockchain sector. Liquid staking protocols provide a solution to the liquidity lock problem by making it easier for users to get liquidity for their validator stakes or their participation in a staking pool, thereby incentivising more delegators to stake and increasing the decentralization and security of the networks. By combining LSTs with DeFi apps, the overall use of chains increases, which also provides more opportunities for generating yield, making the blockchain ecosystem more resilient and sustainable. In essence, liquid staking marks a new paradigm for utilizing assets within any given blockchain, serving as a strategic bridge between blockchain network security and the innovative world of DeFi. It is an important step in the direction of making a more seamless and optimized digital asset economy. With this in mind, liquid staking is not an add-on feature, but an essential building block of DeFi’s present and future.

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Last updated 1 year ago

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