Bitcoin Switzerland Ethereum liquid staking offered in its home market in Switzerland liquid Collective.
Swiss cryptocurrency company Bitcoin Suisse forms the latest addition to Liquid Collective, a liquid staking protocol built and operated by an independent consortium of web3 companies.
Incorporation into the protocol will enable clients across the Swiss market to engage in liquid staking of the Ethereum cryptocurrency. Staking is done through the Liquid Collective, a receipt token is generated through the protocol, and ETH is converted to LsETH.
Participants can leverage this receipt as collateral to participate in web3 and wider decentralized finance (DeFi) projects.
From fixed capital to liquid capital
Its decentralized nature is seen as one of the main advantages of cryptocurrencies, but this crucial feature lacks a central authority person responsible for validating transactions.
proof of work
To overcome this, Bitcoin, the world’s most popular cryptocurrency, employs a mechanism called Proof of Work (PoW).
This involves watching network participants decide which new blocks of transactions to add to the blockchain, and to accomplish this, computational energy must be expended to generate or mine new valid blocks.
As such, various players on the network are competing to “prove their work”, with successful players adding their latest batch of transactions to the blockchain, giving away a portion of the cryptocurrency in the process. can be obtained.
PoW creates new blocks and validates new transactions in a scalable way, but faces criticism for it. energy intensive process And the e-waste it creates.
Proof of Stake
For these reasons, Ethereum, the focus of this article, switched to an alternative mechanism last year called Proof of Stake (PoS).
PoS sees the same end goal as PoW in validating transactions and adding new blocks to the blockchain, but the method of achieving this is very different.
In PoS, participants called “validators” vote on transactions they deem legitimate. A validator votes for the correctness of a new block by staking her ETH against the chosen block or delegating it to other users.
Stakers do this for the financial benefit of PoS, as they receive rewards in cryptocurrency over time.
PoS overcomes the energy barriers associated with PoW while supporting greater transaction throughput and capacity, but this mechanism can lead to centralization by relying on validators with the most funding. I have. 32 ETH is required to become a validator on the Ethereum network.
And where Liquid Collective is concerned, another major drawback of staking is the exit period. Staking ETH locks you in, so staked tokens earn rewards but cannot be used for trading or other activities at the same time.
But Bitcoin Suisse’s joining the Liquid Collective seeks to overcome this dilemma.
Liquid staking offers a different approach than traditional staking mechanisms, allowing users to lock their tokens for a period of time to secure the PoS blockchain and receive network rewards.
While traditional staking methods are subject to bonding and debonding periods that can last from days to weeks, in liquid staking, token holders stake their tokens and receive receipt tokens. This is the amount after deducting fines and fees.
“Institutional investors and individual customers are increasingly asking to participate in staking to earn network rewards,” commented Bitcoin Suisse’s chief product officer. Michael Gawkler.
“Staking also includes disincentives to participation. The two biggest are the illiquidity window and the lockup of staked tokens. These mechanisms are primarily used to maintain the security and integrity of the network. It exists,” continues Gauckler.
“Liquid staking is an innovation that addresses these barriers to participation by providing users with greater capital efficiency and liquidity while maintaining the security features of the network.”
The web3 and DeFi communities have collaborated to develop the Liquid Collective decentralized protocol to open access to multichains. liquid staking standardThe protocol aims to increase mass adoption of liquid staking and also to increase liquidity and composability of the web3 economy.
Launched with Ethereum staking, the protocol aims to meet the compliance needs of institutions while setting standards for performance and security.
Liquid Collective Integrator
“Bitcoin Suisse joining the Liquid Collective expands the protocol’s access to the Swiss market and furthers our vision of enabling global participation in securing the decentralized internet,” he commented. Matt Reisingerco-founder and CEO alluvial, A company that supports the development of the Liquid Collective protocol.
“We are delighted to work with the Bitcoin Suisse team to further expand our participation in liquid staking with European institutions.”
Bitcoin Suisse is the first Swiss-incorporated Liquid Collective integrator focused on the Swiss market. Integrators, including exchanges and custodians, provide entry points for Liquid Collective stakers to participate.
The integrator’s services allow users who pass Know Your Customer (KYC) criteria to deposit funds into the Liquid Collective and create LsTokens.