With the recent network update to version v12, the developers of the Cosmos platform have integrated a Liquid Staking Module (LSM) into the central blockchain of the Cosmos Hub ecosystem.
This allows users to stake their ATOM tokens through validators and exchange them for liquid assets stATOM and stkATOM while not needing to unlock their coins and wait for the two-week unlinking period.
Furthermore, LSM enables the possession of passive income as well as the option to use stATOM and stkATOM as capital in DeFi protocols within the Cosmos space.
The maximum amount of tokens able to be put into liquid staking is limited to serve as a safety measure; the limit is 25% of the total number of coins placed by validators but can be changed via decision by the management system in the future.
The team behind the Leap Cosmos wallet noted the advantages of LSM, explaining that it will make ATOM staking more profitable, attract additional tokens, increase the binding rate, reduce the coin’s inflation rate, and make it “more utilitarian in nature.”