How to Create a Liquid Staking Protocol Like Lido, Rocket Pool, or Jito?

Key Takeaways:

• Learn the essentials of liquid staking protocol development from the perspectives of both investors and business owners.
• Peek into platforms like Lido, Rocket Pool, and Jito Labs contributes to the liquid staking environment.
• Explore how to create a liquid staking protocol like Lido, Rocket Pool, or Jito Labs with our expertise.

The crypto market is a bag full of surprises that keeps reinventing itself once in a while as a way to redeem its presence in the digitalized world. With adoption levels projected to go to new maximums, noting any advancement is essential, leading us to explore what liquid staking protocol development has in the box for us. While remaining under the deeper annals of decentralized finance, liquid staking protocols have attained widespread popularity among crypto-savvy investors. This blog will mainly focus on how leading platforms like Lido, Rocket Pool, and Jito Labs pioneer in the domain and how you can create one on your own with our experts.

Liquid Staking Platforms: An Overview

A liquid staking platform or protocol lets people actively participate in staking activities in Proof-of-Stake (PoS) blockchains without keeping their assets wholly locked. Such a platform comes with unnatural capabilities that benefit an investor as well as the entire crypto ecosystem in ways never seen before.

• These platforms usually function by letting users stake in a blockchain using the network’s native coin. For this, users get rewards in the form of the platform’s native tokens called liquid staking tokens (LSTs), which can be utilized to provide staking support for other DeFi protocols or used as a medium of payment. 
• Liquid staking through such dedicated applications tends to increase accessibility for crypto investments by slashing barriers in the conventional DeFi sector. Such actions lead to enhanced liquidity for crypto tokens in the market powered by LSTs that can be used for various use cases in the DeFi space.
• Alongside these elements, some liquid staking platforms also provide additional rewards on top of regular staking rewards, opening added profiting opportunities for investors. The overall efficiency of cryptocurrencies also increases because they are circulating through other DeFi ventures, making cryptocurrency investments worthwhile in the long and short term.

Lido: The Leading LST Protocol

Lido is a well-known liquid staking platform focusing on Ethereum alongside most Proof-of-Stake (PoS) blockchain networks. According to the data aggregation portal DeFiLlama, the total value locked (TVL) in Lido is more than $28.5 million, displaying an upward growth since the collapse of the FTX exchange way back in 2022.

• The platform offers multi-chain staking provisions, letting users stake cryptos across PoS-based blockchains like Ethereum, Polygon, Solana, Kusama, and Polkadot, opening opportunities for heightened liquidity in these networks. Lido also offers liquid tokens representing staked assets as rewards for their activity on the application, promoting multiple utilities for cryptocurrencies.
• The liquid staking portal utilizes community governance through a special decentralized autonomous organization (DAO) responsible for significant protocol updates. People holding the platform’s $LDO tokens based on the ERC-20 standard can participate in decision-making activities, ensuring democratized business operations. 
• It even has non-fungible tokens (NFTs) that represent withdrawal request positions when users want their LSTs exchanged for the original crypto coin (for example, Ethereum). Lido ensures platform security at all times using a distributed network of node operators to verify and validate in-app transactions at all times. 

Rocket Pool: The Legacy Liquid Staking dApp

Rocket Pool is one of the oldest decentralized liquid staking platforms on Ethereum out there, with origins dating back to 2016, well before the initial coin offering (ICO) boom. The application now has over $3.5 billion worth of funds locked in total, making it a significant player in the budding crypto liquid staking landscape.

• While Rocket Pool is not compatible with multiple blockchains, it has implemented a revolutionary measure by allowing super-low staking requirements (in the order of 0.01 ETH). Such provisions for users to enter the staking game make Rocket Pool a forerunner in making global DeFi adoption a feasible idea in the long run.
• Just like Lido, Rocket Pool also offers a unique liquid staking token, “rETH,” that can be exchanged for other cryptocurrencies, used in other decentralized finance applications, and concurrently used for earning added rewards. It also leverages the power of a decentralized network of nodes, ensuring high levels of security and efficiency.
• The platform’s native token, $RPL, is used for governance operations, slashing insurance, and network incentives, making it a multi-utility token that benefits various types of operators. Additionally, node operators in the Rocket Pool app need to invest just 16 ETH in exchange for huge commissions and rewards in the long term.

Jito Labs: Maximizing Solana’s Performance

Jito Labs (or Jito) is a liquid staking platform on Solana that aims to distribute rewards generated from the MEV (Maximum Extractable Value) of the blockchain. This application works a bit differently compared to the others, owing to its take on maximizing Solana’s utility as a blockchain and cryptocurrency. The platform is still growing, as seen by its $914 million TVL, although trends have been upward since its inception.

• People looking to maximize their trading prowess on MEV (referred to as Searchers here) are provided with unique provisions like Bundles, Mempool, and ShredStream. Each of these executes different functions to provide searchers with the desirable rewards. These people’s job is to find profitable transaction bundles to the Solana mainnet.
• Validators in the platform can tap into the local client Jito-Solana, which is highly user-friendly and quick to start operations (in the order of 10 minutes). This provision can aid validators in earning and sharing MEV in Solana, an attractive prospect as it taps into both traders and stakers.
• Stakers on the Jito Labs platform can gain rewards in $JitoSOL, which is the liquid staking token here. These tokens entitle people to earn additional rewards from MEV transactions occurring on Solana. The application ensures to remain committed to maintaining capital efficiency and optimal blockchain performance at all times.

How to Create a Liquid Staking Protocol Like Lido, Rocket Pool, or Jito?

If you are planning to create a liquid staking protocol like Lido, Rocket Pool, or Jito, there is a comprehensive process involved in making your idea come to life. Since liquid staking protocol development is a newer business model, there are several intricacies that we should consider before jumping into the process.

• Choose a Blockchain: Choose a blockchain based on the Proof-of-Stake (PoS) consensus mechanism for your liquid staking platform. 

• Design Your Protocol Architecture: Design your protocol’s architecture by deciding the operational nature, validator selection criteria, liquid token design, and security measures.

• Development and Testing: Develop and test the platform using state-of-the-art technological stacks to ensure it meets all your functional and business requirements.

• Governance and Incentives: Decide on the governance structure and incentivizing mechanism that will keep the platform decentralized and running in the long term.

• Legal Compliance: Establish sufficient measures to ensure the platform is legally compliant in all operational jurisdictions with aid from experienced legal professionals.

• Launch and Maintain: Launch the liquid staking application for public use after promotions and maintain it periodically to ensure optimal performance and security at all times.

Conclusion

Hence, we have explored the prospects liquid staking protocol development offers for aspiring businesses and crypto-savvy investors. With such unique benefits that certainly will drive crypto capital efficiency, the business model can aid in making the decentralized finance space better. If you want to create a liquid staking protocol like Lido, Rocket Pool, or Jito, now is the right moment to start building one for your own. Our experts at Blockchain App Factory can come with the necessary tools and expertise to craft a liquid staking dApp with all the features and functionality at economical costs. Get in touch with us today to begin building your new liquid staking application!