Sui launched liquid staking, why is it better than the traditional staking model?

The Sui network is an innovative Layer 1 blockchain. With an object-oriented data model, the network can provide a higher performance infrastructure layer for Web3.

Today, Sui announced the launch of a feature where liquidity staking will be part of the latest network upgrade. For the Sui community, this upgrade is very important, giving developers new capabilities: allowing token holders to obtain derivative tokens in proportion to the value of their mortgaged SUI tokens, bringing new possibilities to its DeFi ecosystem.

The realization of the pledge function proves that the development of the network is driven by the community. Based on the Sixth Sui Improvement Proposal (SIP-6), the developers of Sui are now able to provide a fully non-custodial liquid staking solution. This proposal was developed by a proactive team within the Sui community, and community approval was critical for the rollout of SIP #6 on the Sui network.

Due to the unique architecture of the Sui network, third-party liquid staking applications on Sui can provide more benefits for liquid staking - more incentives for staking. This brings a result: the pledge power will not be concentrated in the hands of one or a few verifiers, which will ultimately protect the security of the network.

Staking includes two aspects: derivative tokens and original tokens. Derivative tokens are issued by a third party (e.g. stETH on Ethereum) in the same amount as the staked tokens. For example, a person who pledges 100 SUI can get 100 stSUI (stSUI is only for illustration, the token is issued by a third party.) This derivative token can be used for other purposes, such as trading, lending, etc. On the other hand is the original token. The original tokens are still staked, continuing to help secure the network as part of the consensus process.

In the process of staking liquidity, Sui differs from other networks in one key way. Other networks rely on third-party liquidity staking protocols to handle two aspects of the liquidity staking process: first, the protocol issuing derivative tokens, and second, choosing which validators the staked tokens are delegated to. For example, on Ethereum, Lido provides both functions. **On the Sui, these two items are separate from each other. **Most importantly, unlike other networks, stakers can choose to stake their original tokens to any validator on the network.

Liquidity staking provides greater utility to stakers, which increases the incentive to stake, secure the blockchain network, and in turn promotes decentralization. Limiting the choice of validators for stakers can have the opposite effect, concentrating power in the hands of one or a few validators on the network. **Sui's liquid staking mechanism avoids this problem. **

"Adding native support for liquidity staking dApps as part of Sui's core technology addresses a clear need from members of our community. They want to participate in securing the Sui network without sacrificing liquidity." Managing Director, Sui Foundation Greg Siourounis said. "We thank the Sui community for their continued dedication and creativity in developing and ratifying SIP #6, and we look forward to seeing how developers will take advantage of this new capability to build applications on Sui."

About Sui Network

Sui is an original Layer 1 blockchain and smart contract platform. The network is designed from the ground up to make ownership of digital assets fast, private, secure and accessible to all. Its object-oriented model is based on the Move programming language, which supports parallel execution, sub-second confirmation and rich on-chain assets. With horizontally scalable processing and storage, Sui can support a wide range of applications and run at high speeds at low cost. Sui enables creators and developers to build user-friendly platforms.