🌊Liquid staking
The Solana network is secured by its validators. Solana has a proof of stake consensus mechanism, meaning SOL needs to be staked at one of these validators in order to secure the network. One can stake SOL directly to a validator, but this has several disadvantages:
The staked SOL is locked for at least 1 epoch (up to 3 days), meaning it cannot be used to provide liquidity, generate yield, etc.
Staking SOL at only one validator is not good for the decentralisation of the network.
In order to tackle these, one can liquid stake their SOL. By liquid staking SOL, you stake your SOL at a stake pool, like The Vault, and get back a liquid staked token. This token represents staked SOL and can be used to provide liquidity, generate yield, as collateral for borrowing funds, etc.
Additionally, the stake pool stakes to many different validators, ensuring that the distribution matches the goals of the pool community.
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