LPoS in DeFi: Improving liquidity and staking efficiency

Liquid Proof of Stake (LPoS) is an advanced staking mechanism that improves liquidity, rewards, decentralization, and efficiency in the decentralized finance (DeFi) ecosystem. Unlike traditional staking, which locks up assets, LPoS allows users to stake while retaining access to their funds, enabling more flexible and profitable participation in DeFi.

1. Liquidity and accessibility: LPoS vs. traditional staking

• LPoS: Users can stake and still use more than 90% of their funds for DeFi activities.
• Traditional staking: Requires full locking of assets and limits liquidity.

Calculation of the liquidity comparison:

If traditional staking locks 100% of the assets and LPoS enables liquidity above 90%, the liquidity increase is:

900=∞\frac{90}{0} = \infty090=∞

LPoS provides continuous liquidity during staking.

Graphic: Liquidity in comparison

LPoS users can earn rewards while staking their funds across multiple DeFi platforms.

2. Reward generation: LPoS vs. standard staking

• LPoS: Earn staking rewards while using funds in DeFi
• Standard stake: Rewards only accrue if assets remain locked

Example of a reward calculation:

Let’s assume a stake of 10,000 EURT at 10% APY:

LPoS offers up to 80% higher return potential through the possibility of DeFi participation.

3. Decentralization and network security

• LPoS: The stake is distributed among several validators, which ensures decentralization
• Centralized staking: Few locations control the network

Calculating the strength of decentralization:

Assume a network with 100 verifiers:

• Traditional staking (centralized pools): The top 10 validators control 60%
• LPoS (distributed staking): The top 10 validators control only 30%

LPoS improves decentralization by 50%

4. Automation of smart contracts: efficiency and transparency

• LPoS: Automates staking, rewards, and validator selection via smart contracts.
• Manual Bets: Requires users to claim rewards and manage bets manually.

Calculating the efficiency gain:

If manual staking requires 10+ transactions per year, but LPoS automates everything and requires 0 manual actions:

100=∞\frac{10}{0} = \infty010​=∞

LPoS eliminates human error, reduces costs, and ensures transparent, trustworthy staking.

5. LPoS implementation & accessibility

• LPoS: Lower entry barriers so more users can join with smaller amounts
• Traditional bets: Requires high minimum bets, which reduces participation

Calculating accessibility growth:

If traditional bets require a minimum of $1,000 and LPoS allows $10 bets:

100010=100\frac{1000}{10} = 100101000​=100

LPoS is 100 times more accessible than traditional staking.

LPoS revolutionizes staking by combining liquidity, rewards, decentralization, and automation – allowing users to maximize their wealth effortlessly.