Demystifying Lava Staking: A Beginner’s Guide
Millions of people navigate bustling city roads every day. While some take familiar routes, others rely on apps to find the quickest route to their destination.
In the blockchain world, decentralized applications (DApps), NFT marketplaces, and crypto wallets function similarly, requiring communication pathways with blockchains like Ethereum and Solana. RPC (Remote Procedure Call) nodes function as these pathways, ensuring seamless communication between apps and blockchains.
Lava Network, a decentralized infrastructure that powers and incentivizes these RPC nodes, ensures that the blockchain world stays connected.
In this guide, we’ll explore:
Lava is a Cosmos-based protocol that manages traffic for multiple blockchains. It supports over 40 chains and facilitates interactions for millions of daily users and thousands of applications. When you use a crypto wallet or interact with a DApp, you might unknowingly use Lava’s partner RPC providers to connect to the blockchain.
Lava optimizes blockchain communication by aggregating and routing requests through high-performing RPC nodes. Lava network creates more reliable and scalable access for blockchain developers and users.
Understanding the Lava Network requires familiarity with its main participants:
Blockchains create incentive pools on Lava, funded with native tokens or alternative assets like stablecoins and memecoins. For instance, a blockchain like Cosmos Hub may set up an ATOM token pool to reward providers for their services.
Data providers join Lava to handle blockchain data requests, earning monthly rewards from these pools. Their payouts depend on two factors:
Traditionally, users and developers must pay RPC Providers to use their services.
Alchemy, one of the leading blockchain RPC nodes, charges up to $199 monthly. While there are free public RPC nodes, these are primarily used for testing purposes and have unreliable connections.
With Lava staking, users and developers gain free access to RPC services, while blockchains enjoy improved ecosystems and reliable and cost-effective infrastructure.
Enter the amount of Lava you’ll be staking. Polli will automatically select and optimize validators based on their proprietary validator scoring system.
The Polli platform evenly distributes the delegated tokens to the validators. Make sure to consider the slight differences in expected APR and commission rates. You can also reduce the number of validators depending on your preferences.
Once you’ve clicked the button you will be redirected to the restaking page.
Restaking to a provider gives you restaking rewards from the native tokens in the incentive pools.
In the picture above, restaking with Impulse gives you an estimated 18.78% APR and cross-chain tokens. These restaking rewards, when added to the Lava staking APR, combine for a decent return on your staked assets.
- What the Lava Network is
- The different players in Lava
- How Lava Network functions
- How staking and restaking plays a role in Lava
- How to perform Lava staking and restaking
What is the Lava Network
Lava is a Cosmos-based protocol that manages traffic for multiple blockchains. It supports over 40 chains and facilitates interactions for millions of daily users and thousands of applications. When you use a crypto wallet or interact with a DApp, you might unknowingly use Lava’s partner RPC providers to connect to the blockchain.
Lava optimizes blockchain communication by aggregating and routing requests through high-performing RPC nodes. Lava network creates more reliable and scalable access for blockchain developers and users.
What is an RPC Node?
RPC, or Remote Procedure Call, enables programs to communicate across different computers. If you check your balance on Keplr Wallet, the wallet sends an RPC request to a blockchain node to retrieve your balance. Lava network ensures that this communication is smooth and uninterrupted.Key Players in the Lava Ecosystem
Understanding the Lava Network requires familiarity with its main participants:
- Lava Validators: These entities validate transactions and secure the Lava Network through a Delegated Proof-of-Stake (DPoS) consensus mechanism.
- Lava Token Holders: Users who delegate their Lava tokens to validators contribute to the network’s security and earn rewards.
- Networks: Blockchains and rollups that utilize Lava to manage their RPC traffic.
- RPC or Data Providers: Providers handle blockchain data requests from users and apps, ensuring reliable communication.
- Developers and Apps: The primary users of the Lava Provider infrastructure.
How Does Lava Work
Users and developers face disruptions without reliable RPC providers, such as failed transactions during operations. For instance, your transaction could fail when swapping from one crypto to another. Lava Network addresses this challenge with a robust data provider incentive and routing system:Establishing Incentives
Blockchains create incentive pools on Lava, funded with native tokens or alternative assets like stablecoins and memecoins. For instance, a blockchain like Cosmos Hub may set up an ATOM token pool to reward providers for their services.
Data providers join Lava to handle blockchain data requests, earning monthly rewards from these pools. Their payouts depend on two factors:
- Service Quality: Providers with higher performance metrics receive larger rewards.
- LAVA Staked: The more Lava tokens a provider stakes, the greater their chance of being selected to service a network, thus earning more rewards.
Optimized Request Routing
Lava aggregates these providers and intelligently directs RPC, optimizing routing based on provider performance and user geolocation. The Lava network assures users of 24/7 access to blockchains with minimal downtime.Benefits for Users and Developers
Traditionally, users and developers must pay RPC Providers to use their services.
Alchemy, one of the leading blockchain RPC nodes, charges up to $199 monthly. While there are free public RPC nodes, these are primarily used for testing purposes and have unreliable connections.
With Lava staking, users and developers gain free access to RPC services, while blockchains enjoy improved ecosystems and reliable and cost-effective infrastructure.
How to Stake Lava
Lava’s Delegated Proof-of-Stake model allows users to delegate Lava tokens to a validator to support the network’s operations and security. Stakers can choose from supported wallets like Keplr and Leap and staking platforms like Polli and Staking Rewards. You can delegate LAVA as a staker or Provider, the latter of which is required to delegate LAVA to service partner networks. Here’s a step-by-step guide to staking LAVA:Step 1: Select Lava Network
Head to Polli.co and connect with a supported wallet like Keplr Wallet or Leap. Once at the portfolio dashboard, search for Lava and click “Optimize.”
Enter the amount of Lava you’ll be staking. Polli will automatically select and optimize validators based on their proprietary validator scoring system.
Step 2: Choose a Validator
Polli selects the five best validators.
The Polli platform evenly distributes the delegated tokens to the validators. Make sure to consider the slight differences in expected APR and commission rates. You can also reduce the number of validators depending on your preferences.
Step 3: Start Staking
Once you’ve decided on the validators, click “Delegate All.” Check out this video from Polli.co, a staking management and optimization platform, for a full, in-depth demonstration of Lava staking.Lava Restaking to Providers
Lava also introduces restaking, a feature popularized by EigenLayer, and Ethereum restaking protocol. Restaking allows users to redelegate their staked LAVA tokens to an RPC provider. By doing so, users help providers secure partnerships with blockchains (by increasing their total stake) and earn additional rewards. You can restake to a Lava provider using the Polli platform. Once your staking delegation has finished, you’ll be redirected to a confirmation page with the option “Stake to Provider.”
Once you’ve clicked the button you will be redirected to the restaking page.
Restaking to a provider gives you restaking rewards from the native tokens in the incentive pools.
In the picture above, restaking with Impulse gives you an estimated 18.78% APR and cross-chain tokens. These restaking rewards, when added to the Lava staking APR, combine for a decent return on your staked assets.
Risks of Lava Staking
Lava has differentiated itself as it is not another blockchain. While there are thousands of blockchains, hundreds launch periodically; Lava powers the infrastructure, keeping the blockchain industry moving smoothly. Here are other risks to Lava staking and holding Lava tokens.Limited Rewards
You can restake yourwith Lava tokens toand earn from a basket of cross-chain tokens like Near, Axelar, Evmos, Solana, to name a few with moreand other chains coming in the future. EarningOwning a diversified set of tokens allows you to mitigate somethe downside risks of holding one asset that your entire investment fails while capturing possible upside returns from a diversified portfolio.. However, with the current Lava model, you can only get the basket of tokens that the specific provider has. You cannot choose tokens from the pool, and you choose a provider to restake to and earn a percentage of all the tokens in the providers basketmust get all. This limitation means that you may be earning rewards for networks you do not have a conviction aboutthat you dislike.Hard Slashing
Staking safeguards blockchains by reducing the amount staked in crypto. This penalization happens when a validator goes offline or acts maliciously. In Ethereum staking, where validators must stake 32 ETH (approximately $100,000 as of writing), slashing reduces up to 1 ETH. Lava’s model imposes harsher penalties. If a validator misbehaves, you could potentially forfeit your entire staked amount. Make sure to delegate to trusted validators, as you can lose all your staked Lava.Liquidity Lock Up
Unlike liquid staking protocols, which grant you immediate liquidity through issuing a liquid staking token, staked LAVA tokens stay locked for 21 days. This unbonding period reduces your flexibility to trade during market fluctuations.Final Thoughts on Lava Staking
Lava Network is not just another blockchain; it powers the infrastructure behind blockchain connectivity. This novelty differentiates it from the networks launching in today’s market. By staking or restaking LAVA tokens, you earn rewards and support a reliable, scalable, and efficient blockchain ecosystem. Whether you’re a beginner or a seasoned crypto enthusiast, understanding and participating in Lava staking provides a way to engage in the blockchain industry in a new manner.The content of solostakers.com is for informational purposes only and should not be considered financial advice. It represents the personal views and opinions of the author(s) and is not endorsed by any financial institution or regulatory body. Cryptocurrency and staking investments carry inherent risks and readers should conduct their own research and consult with a financial professional before making any investment decisions. The owner and author(s) of solostakers.com will not be liable for any losses, damages, or consequences arising from the use of the information on this site. By accessing solostakers.com, you agree to bear full responsibility for your investment decisions.
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