You are currently viewing EXPLAINER | A Look at Liquid Staking with BENQI on Avalanche

EXPLAINER | A Look at Liquid Staking with BENQI on Avalanche

Staking is a process where cryptocurrency holders lock up their assets to support the operations of a blockchain network, earning rewards in return.

However, traditional staking has limitations – the inability to utilize staked assets for other purposes while they are locked up. Liquid staking addresses this constraint by providing a flexible solution that allows users to convert their staked assets into fungible tokens, enabling liquidity and accessibility to a broader range of financial opportunities.

Liquid staking platforms such as BENQI utilize advanced protocols to issue tokenized representations of staked assets. These tokens, often referred to as staked tokens, can be freely traded, lent, or used as collateral on decentralized finance (DeFi) platforms.

Users benefit from the best of both worlds – participating in the network’s staking activities while retaining the flexibility to engage in a variety of decentralized financial activities.


BENQI Liquid Staking

BENQI Liquid Staking (BLS) is an Avalanche liquid staking solution that tokenizes staked AVAX. BLS is part of BENQI, a DeFi protocol built on the Avalanche network. The BENQI protocol consists of BENQI Liquid Staking and BENQI Liquidity Market.

The BENQI Liquid Staking protocol tokenizes staked AVAX (sAVAX) and allows users to freely use it within Decentralized Finance dApps such as automated market makers (AMMs), lending & borrowing protocols, yield aggregators, etc.

Users stake AVAX on the protocol and receive a yield-bearing asset, sAVAX, that earns yield accrued from Avalanche validator rewards. To stake on the platform, you are required to connect an EVM-compatible wallet with AVAX funds:

BENQI Liquid Staking provides users with a seamless solution to stake AVAX on the Avalanche C-Chain ( (Avalanche Contract Chain). As traditional staking on Avalanche occurs on the Avalanche P-Chain (Avalanche Platform Chain), users will be required to execute tedious cross-chain transfers to get started. With BENQI Liquid Staking, all users require is an EVM-compatible wallet, such as MetaMask, and some AVAX to get started.

Users also get to earn validating rewards from the P-Chain without the need to operate a full node, lock up AVAX on a validator node, or meet the minimum staking threshold, thanks to a solution like BENQI Liquid Staking.

Once you stake, the sAVAX tokens you unlock (receive) can be freely transferred, traded, or used within DeFi applications such as automated market makers, lending & borrowing protocols, and yield aggregators like Ribbon Finance.

Some of the key DeFi platforms where you can participate with sAvax to earn rewards include:

Benqi Liquidity Market
Trader Joe
Ribbon Finance

You can explore the BENQI Liquidity Market, which is the primary lending and borrowing protocol on Avalanche, as shown below:

The platform lets you supply or borrow various DeFi assets, including AVAX and sAVAX tokens. On the platform, you can also see an overview of the rewards you earn for lending a given token.

Back to the BENQI Liquid Staking, users have the flexibility to redeem the AVAX asset at any time.  One way is without fees through a 2-week unstaking cooldown period or instantly by swapping it via automated market makers, such as Balancer, with an associated exchange fee.





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