This article analyzes four Cosmos liquid staking providers: Stride, Persistence, Quicksilver, and MilkyWay. I cover their stats, performance, strategies, validator selection & delegation methods, tokenomics, and more.

TL;DR:

> Stride is the leading Cosmos liquid staking protocol and focused solely on liquid staking, emphasizing governance-driven validator selection.

> pSTAKE aims to maximize LSTfi yields and explores trends like Restaking. It is the only protocol that supports BNB and soon Solana.

> Quicksilver Protocol prioritizes user sovereignty, allowing users to choose validators.

> MilkyWay Zone tailors to Celestia's ecosystem, relying on multi-sig due to Celestia's lack of support for ICA and ICQ.

1. What Is Liquid Staking?

Liquid staking enables users to freely trade or transfer their staked tokens, in contrast to traditional staking, where users need to go through the unbonding period, normally between 14 to 28 days, before it can be traded freely. This is typically achieved through the use of liquid staking tokens (LST) representing the staked assets.

If you’re still curious about how most Cosmos liquid staking protocols work, check out this thread by Riley from Stride.

2. Stats

> Stride is the leading liquid staking provider, with over 203M in TVL and a market cap of 270 M. They also support the 13 different Cosmos chains. Most of Stride's TVL is from DYDX, TIA, and ATOM.

> pSTAKE is the only liquid staking provider that supports BNB and soon Solana.

> Quicksilver is the only protocol that implements intent signaling for the validators’ selection.

> MilkyWay only focuses on Celestia and has captured a huge market share. They are the only ones that haven’t launched their own token.

***Updated on 9th of April 2024.

3. The Tech

• ICA & ICQ

Stride, pSTAKE and Quicksilver use Interchain Accounts (ICA) and Interchain Queries (ICQ) to perform multichain liquid staking and maximize yields through auto-compounding.

> To learn more about ICA, read this thread by Riley from Stride.

> To learn more about ICQ, read this thread by @P2Pvalidator

• Celestia case

Celestia, however, does not support ICA & ICQ, so both Stride and MilkyWay, which enable liquid staking TIA, use Multisig when interacting with this chain.

This also means MilkyWay, as a Celestia-aligned liquid staking protocol, relies exclusively on Multisig. The protocol currently works on the Osmosis chain, but it is preparing for a transition to a sovereign rollup secured by Celestia for the purpose of issuing native milkTIA tokens on this chain.

For more details, check out MilkyWay docs, Stride’s post on Celestia forum.

4. Validator Selection & Delegation

Each protocol has a different method for selecting validators:

• Stride

Stride currently uses council-driven criteria:

> An advisory council curates a validator set and recommends it to the governance.

> STRD stakers use on-chain governance to vote on the validator set and weights.

> Delegation is based on weight for most chains and copy staking for TIA and DYM.

• pSTAKE

pSTAKE uses governance-driven criteria:

> Automated validator stake delegation strategy, dynamically selecting and rebalancing validators daily based on predefined criteria and a scoring mechanism.

> Delegation is based on weight.

> Doesn’t require an application to join the validator set.

• Quicksilver

Quicksilver uses intent signaling, which makes it stand out from the rest:

> Staker can choose the validator(s) they would like the protocol to stake to and set the validator weights. Epochly, Quicksilver rebalances the delegations based on the collective intent of qAsset holders on a chain.

> It doesn’t require an application to join the validator set.

→ Only Quicksilver allows choosing validators.

• MilkyWay

MilkyWay is partnering with Celestia's validator set and delegates the staked TIA evenly among selected validators.

5. Strategies

• Stride

> Stride builds a minimal chain and focuses solely on liquid staking, nothing else! They don’t support native DeFi activities.

> Stride aims to establish stTIA as modular money and Stride Zone as the stTIA & TIA routing hub through their partnership with Hyperlane. One strategy involves airdropping 5% of the total STRD supply to stTIA holders.

• pSTAKE

> pSTAKE Finance is the only one to support BNB and soon Solana.

> Together with Persistence, they’re also working on bringing restaking to Cosmos.

• Quicksilver

> Quicksilver keeps signalling intent as their unique selling point to enhance user sovereignty while keeping the fee low.

> It is currently working on two features:

> Governance by Proxy: Users can vote regardless of where their qAssets are.

> Participation Rewards: Users get rewards sent directly into their wallet for using qAssets across Cosmos.

• MilkyWay

> MilkyWay remains tailored only for Celestia’s modular blockchain ecosystem . It rewards users with mPoints when they hold. or/and use milkTIA in Defi protocols like lending and LPing. 10% of the total supply of MILK tokens will be distributed to mPoints holders.

6. Tokenomics

Incentives of holding and staking STRD, QCK and MILK are similar: holders/stakers of the protocol native tokens receive a portion or all of the protocol fee charged on staking rewards generated from liquid staked assets. Only Quicksilver re-distributes all of the fees (3%) to QCK stakers.

This implies the higher the TVL, the more fees will be accrued to the token holders/stakers.

PSTAKE is used to reward contributors of the pSTAKE ecosystem. The 5% fee charged on staking rewards from the protocol is currently going toward Persistence stakers.

7. User experience

In general, All four apps are user-friendly with minimalist UI.

I asked a non-Cosmos friend to test out all four protocols to provide feedback. Here’s her thought:

• Staking 

> With Stride, pSTAKE and MilkyWay, liquid staking takes only 2-3 clicks, with a processing time of around 30 seconds. 

> With Quicksilver, you can choose up to 8 validators, set weights for each validator, and then sign a contract. The processing time takes about 2 minutes.

• Unstaking 

> Stride unstaking process takes a period of time, normally 3-4 weeks, to complete. If users want to get the underlying token sooner, they have to trade the LSTs on a DEX, like Osmosis (as suggested on the app). To do this, users have to IBC send LSTs, which require STRD for transaction fees ⇒ Could be a complex process for non-STRD holders.

> Quicksilver also requires QCK for fees, with similar options for quick access to tokens as Stride.

> MilkyWay's unstaking process is similar, takes slightly longer than Stride and also offers swapping on Osmosis to get the token sooner. But because MilkyWay is built on Osmosis, this swapping process is much easier, with no IBC send transaction needed.

> pSTAKE has the Instant Redeem feature integrated into the protocol, which is a plus. The 1% fee for this feature, however, can be high for large transactions.

Disclaimer

This is a research article with the purpose to educate readers about certain topics and not a financial advice by any mean.