Staking vs Lending: Which is More Profitable?
Join Liquidity Land and boost your staking and airdrop rewards by 15-50% in Tier1 chains and protocols.
Introduction
In DeFi, there are two main ways to earn with your crypto: staking and lending. Many users wonder which is more profitable and what risks each option carries.
What is Staking
- Locking tokens to secure a blockchain network.
- Rewards are paid in the network’s native token.
- Examples: ETH staking via Lido, SOL via Marinade, DOT via Polkadot staking.
- Average yield: 3–7% APY.
What is Liquid Staking? A new form of staking that issues users a liquid token (staked derivative) in exchange for their locked assets. This token can be freely used in DeFi — for lending, trading, farming, or as collateral. Examples:
- YieldFi – offers liquid staking derivatives that integrate into yield strategies and aggregators.
- Unitas – provides stablecoin-based staking/lending models with liquid tokens that can be reused in DeFi.
Benefits: Earn staking rewards while keeping liquidity. Access to additional DeFi strategies with the same capital. Average yield: similar to staking (3–7%), plus extra yield opportunities from DeFi integrations.
Read more about Liquid Staking in our article. https://liquidity.land/blog/What-is-Liquid-Staking
What is Lending
- Depositing tokens into a lending protocol (e.g., Aave, Compound, Radiant).
- Borrowers take loans using collateral, and lenders earn interest.
- Returns depend on market demand.
- Average yield: 2–10% APY, sometimes higher for stablecoins during special programs and private LP Deals.
Staking vs Lending Comparison
| Criterion | Staking | Lending |
|---|---|---|
| Yield | Usually fixed (3–7%) | Market-dependent (2–10%+) |
| Risk | Smart contract + validator risk | Smart contract + borrower default risk |
| Liquidity | May be locked (except liquid staking) | Funds accessible, but APY fluctuates |
| Use Cases | Pure network support | Flexible: borrowing, LP, yield farming |
Conclusion
- Staking is ideal for stability and simplicity, especially liquid staking
- Lending provides flexibility and potentially higher returns but with variable APY.
- Optimal DeFi strategy: combine staking and lending through yield aggregators to balance risk and reward.