Swirl brings liquid staking to IOTA, boosting liquidity for its DeFi

Liquid staking is coming to $IOTA’s DeFi ecosystem, potentially boosting its liquidity and capital efficiency.

Liquid staking is coming to $IOTA. On Wednesday, May 7, liquid staking solution Swirl launched on the $IOTA ($IOTA) mainnet. According to the protocol, it is the first liquid staking solution on the $IOTA layer 1 network.

With Swirl, users can earn $IOTA staking yields on their tokens while also retaining liquidity. This works by allowing users to stake their $IOTA in return for stIOTA, a liquid token that can be traded at any time. Over time, rewards equivalent to an annual percentage yield of up to 10%–15% accumulate in the stIOTA pool.

Any rewards users receive are auto-compounded, meaning they are automatically reinvested into the staking pool, eliminating the need for manual management. Users can redeem stIOTA for the underlying staked $IOTA at any time, trade it on secondary markets, or use it as collateral in DeFi protocols.

Importantly, while staking grows the number of $IOTA tokens, it does not increase the quantity of stIOTA — meaning the token’s value appreciates over time. For example, a user who exchanges 100 $IOTA for 100 stIOTA could, after one year at 10% APY, redeem that same 100 stIOTA for 110 $IOTA.

$IOTA Foundation touts the utility of liquid staking

Liquid staking has the potential to significantly grow the $IOTA ecosystem. Dominik Schiener, Co-Founder and Chair of the $IOTA Foundation, emphasized the strategic value of the Swirl integration.

“Our partnership with Swirl enables new forms of utility through DeFi, By equipping the $IOTA ecosystem with tools that users need to pursue sustainable capital growth strategies and doing so with the right partners who share in our commitment to decentralization, security, and a user experience marked by diversification, we are setting new standards for the future of decentralized finance,” Dominik Schiener, $IOTA Foundation.