Cosmos chain uses liquid staking tokens from other networks

Developers announced on May 3 that a new Cosmos-based blockchain dubbed “Tenet” will use liquid staking coins from other networks to secure its transactions, potentially enabling the new network to inherit the security of older networks.

The network is presently accessible as a testnet and will launch a mainnet once testing is complete. This comes after liquid staking recently became the largest protocol category in decentralized finance (DeFi).

Liquid staking protocols, such as Lido, Rocket Pool, and Ankr, enable users to stake their coins with a network of validators and receive rewards without operating their own nodes.

These protocols also provide users with “liquid staking derivatives,” or LSDs, which are redeemable for the underlying deposits and rewards.

Tenet will enable users to “restake” these LSDs to earn additional rewards on its network, according to the announcement.

And it will provide credentials representing the LSDs themselves to consumers. The team refers to these tokens as “liquid liquid staking derivatives,” or LLSDs.

The announcement stated that LLSDs would be exploitable in lending applications and decentralized exchanges across the Tenet network.

The team anticipates that using LSDs instead of native coins to secure the network will provide two primary benefits.

First, it “ensures the long-term security of the Tenet chain by leveraging the joint security of each [layer 1] ecosystem that it services.” Second, it ought to “bring additional liquidity and yield opportunities to LSDs.”

At commencement, the protocol is anticipated to permit restaking of liquid staking derivatives of ETH, BNB, Cosmos, Solana, and Polygon.

Former executives of Ankr and Blockdaemon are developing the new network, which is advised by members of the Lido, Ankr, and OpenAI teams.

Liquid staking protocols have existed since the introduction of Lido in 2020, when they first appeared.

As the Ethereum network transitioned to proof-of-stake and began permitting staking withdrawals in 2022 and early 2023, their prevalence increased.

On May 1, the crypto analytics platform DefiLlama announced that liquid staking had surpassed all other DeFi application categories in terms of total value secured.

As a consequence of the Ethereum Shanghai enhancement, liquid staking may expand in the future, according to some experts.