Staking is an important part of the Walrus network. By staking WAL tokens, users help secure decentralized data storage and support the overall stability of the system. However, native staking comes with a clear limitation. Once WAL is staked, it becomes locked. Users must wait through an unbonding period before they can access their tokens again. During this time, the staked WAL cannot be traded, moved, or used elsewhere.

This lack of liquidity is a challenge for many users. Markets move quickly, and users often want flexibility. Liquid staking was created to solve this problem without removing the benefits of staking. Instead of changing how staking works at the base level, liquid staking builds an additional layer that gives users freedom while keeping the network secure.

The Core Idea Behind WAL Liquid Staking

Liquid staking changes how users interact with their staked WAL. Instead of staking directly and waiting through long unlock periods, users stake through a liquid staking protocol. This protocol acts as an intermediary between the user and the Walrus network.

The key idea is simple. Your WAL is still staked and still helping the network, but you receive a new token that represents your stake. This new token is called an LST, or liquid staking token. The LST can be moved, traded, or used in other applications, even while the original WAL remains locked.

This design removes the biggest weakness of native staking: illiquidity.

Step One: Depositing WAL into the Liquid Staking Contract

The process begins when a user deposits WAL into the smart contract of a liquid staking protocol. This contract is designed to securely manage user funds and staking positions.

At this point, the user is no longer staking directly. Instead, the protocol takes responsibility for staking on behalf of all participants. This makes the process easier for users who may not want to manage technical details themselves.

The deposit is recorded on-chain, ensuring transparency and accountability. Users can always verify how much WAL they have contributed to the system.

Step Two: Staking WAL on the Walrus Network

After receiving WAL from users, the liquid staking protocol stakes these tokens on the Walrus network. This staking process is the same as native staking, meaning the network receives the same level of security and support.

When the WAL is staked, the Walrus network issues non-transferable StakedWal objects. These objects represent the locked staking positions. Unlike normal tokens, they cannot be freely moved or traded.

The liquid staking protocol stores and manages these StakedWal objects in a shared vault. This vault holds the combined staking positions of all users who participate in the protocol. Each user owns a share of this pooled stake.

This pooled model allows the protocol to operate efficiently while maintaining clear records of ownership.

Step Three: Minting the Liquid Staking Token (LST)

To represent a user’s ownership of the staked WAL, the protocol mints a liquid staking token, or LST, and sends it to the user’s wallet.

This LST is transferable and replaceable. Unlike StakedWal objects, it behaves like a normal token. It can be sent to another wallet, traded on a market, or used in decentralized applications.

The LST acts as a receipt and a claim. It proves that the holder owns a portion of the staked WAL held by the protocol. Even if the LST changes hands, the underlying WAL remains staked and continues earning rewards.

This is the key innovation of liquid staking.

Step Four: What the LST Represents

The LST represents a proportional share of the total WAL pool controlled by the liquid staking protocol. This includes both the original staked WAL and any rewards earned through staking.

As staking rewards accumulate, the value of the LST increases. Over time, each LST token becomes redeemable for more WAL than before. This growth reflects the ongoing rewards generated by the staked assets.

In most cases, the protocol deducts a small management fee from the rewards. This fee covers operational costs, maintenance, and development. After this deduction, the remaining rewards benefit LST holders.

The system is designed so that users do not need to claim rewards manually. The rewards are automatically reflected in the value of the LST.

Why Liquid Staking Solves the Liquidity Problem

Native staking locks assets for a fixed period. This protects the network but limits user flexibility. Liquid staking removes this limitation without weakening security.

With an LST:

Users can trade their position without unstaking

Users can respond to market changes

Users can use their stake in other applications

This makes staking more attractive, especially for users who value liquidity.

Security and Trust Considerations

Liquid staking introduces a new trust layer. Users must trust the protocol managing the pooled stake. This makes security and transparency extremely important.

Well-designed liquid staking protocols use audited smart contracts and clear rules. All staking actions are visible on-chain, and users can track how funds are handled.

The protocol does not remove risk entirely, but it spreads and manages it in a structured way.

Impact on the Walrus Ecosystem

Liquid staking benefits not only users but also the Walrus network itself. Because users are more willing to stake when liquidity is available, overall staking participation can increase.

More staking means:

Stronger data security

More stable storage infrastructure

Greater long-term network health

Liquid staking aligns user incentives with network needs.

Long-Term Role of WAL Liquid Staking

Liquid staking is not a replacement for native staking. It is an extension. Some users may still prefer direct staking for simplicity or personal reasons.

However, for many participants, liquid staking offers the best of both worlds. It provides staking rewards and network support while keeping assets flexible and usable.

As decentralized ecosystems grow, this balance between security and usability becomes more important.

Conclusion

WAL liquid staking transforms locked staking positions into flexible assets without removing their core purpose. By depositing WAL into a liquid staking protocol, users allow the protocol to stake on their behalf and manage the non-transferable StakedWal objects.

In return, users receive a transferable LST that represents their share of the staked WAL pool and its rewards. This simple but powerful design solves the liquidity problem of native staking.

Liquid staking makes participation easier, more flexible, and more appealing, while still supporting the long-term stability of the Walrus network.

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