💧Liquid Staking

When staking on BounceBit you are presented with multiple options for ways of staking your assets. Firstly you can stake BTC as well as BB to secure the network.

BounceBit natively provides a Liquid Staking smart contract. If you stake your BTC or BB, you will receive a Liquid Staking Derivative (LSD). This LSD is like a voucher that testifies that you are delegating your assets to a validator.

Currently there are two LSDs you can acquire:

• stBB, the LSD of the BB token.

• stBBTC, the LSD of BBTC

These derivatives will later be able to be restaked to Shared Security Clients (SSC) to aggregate security and unlocking the liquidity of the staked assets, hence the name liquid staking. They can also be redeemed for the tokens they staked (plus/minus a share of rewards and penalties).

Risks and Limitations

Slashing

Liquid staking exposes stakers to have their funds slashed in case the validator acts maliciously or performs badly.

Exploits

Node operators carry the risk of having their private keys compromised, and subsequently losing the funds of stakers.

Secondary Market Volatility

LSDs are not pegged to their underlying assets, which exposes them to normal market movements. They can be affected by low liquidity or market shocks.