> For the complete documentation index, see [llms.txt](https://kayen-finance.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://kayen-finance.gitbook.io/docs/protocol-mechanics/liquid-staking.md).

# Liquid Staking

Liquid staking lets you stake CHZ to earn network rewards while keeping full access to your funds. Instead of locking your CHZ away, you receive a token you can trade, transfer, or use elsewhere in DeFi, all while it keeps earning.

{% hint style="info" %}
Kayen's liquid staking uses the **native staking system built into Chiliz Chain itself**, which menas it's the same mechanism any individual staker would use. Your CHZ is delegated to real Chiliz validators, never held in a company-operated wallet.
{% endhint %}

## How it works

* Deposit: \
  You deposit CHZ into the protocol and receive **stCHZ** (a standard ERC-20 token) in return.
* Delegation: \
  The protocol automatically delegates your CHZ to a curated whitelist of Chiliz validators, screened for health (active status, reasonable commission, low slashing history) and kept balanced across the set.
* Earning: \
  Staking rewards paid by the network are automatically collected and re-staked for you (**auto-compounding**). No claiming or manual action required.
* Withdrawing: \
  You exit by redeeming stCHZ through a **withdrawal queue**. When you request a withdrawal you receive a transferable **Withdrawal NFT** representing your pending claim; after the network's unbonding period (currently **\~2–3 days**), you claim your CHZ.

## Understanding stCHZ and rewards

stCHZ is **not** a rebasing token: The number of stCHZ in your wallet never changes on its own. Instead, your returns are realized through a rising **exchange rate**.

As the protocol continuously earns and auto-compounds network rewards, the total pool of CHZ backing the protocol grows, so **each stCHZ becomes redeemable for progressively more CHZ over time**. Your balance stays fixed; its value grows.

This exchange rate is calculated entirely on-chain from the protocol's actual staked balances. There is no oracle or manually reported price. And because stCHZ is a normal token, you can freely transfer or sell it at any time without going through the unstaking process.

## Fees

* Protocol fee: \
  Kayen charges a **10% fee, strictly on staking rewards earned**.
* Principal safety: \
  Fees are **never** deducted from your deposited principal.
* Zero user fees: \
  There are **no deposit fees, no withdrawal fees, and no fees on stCHZ transfers**. (Validators also charge their own network-level commission on rewards, which is separate from Kayen's fee.)

## Getting your CHZ back

There are two ways to convert stCHZ back into CHZ:

1. Redeem through the withdrawal queue: \
   Your stCHZ is burned, the CHZ amount is locked in at the current exchange rate, and after the \~2–3 day unbonding period you claim your CHZ.
2. Swap on the DEX:\
   Because stCHZ is a normal token, you can trade it for CHZ immediately in a liquidity pool though the market price and price impact apply. No waiting.

{% hint style="info" %}
Use the queue when you want the exact staked value and don't mind waiting; use the DEX when you want CHZ immediately and accept the market rate. See the step-by-step guides:

* [Stake](/docs/kayen-finance-user-guide/lst/stake.md)
* [Unstake](/docs/kayen-finance-user-guide/lst/unstake.md)
* [Withdrawals](/docs/kayen-finance-user-guide/lst/withdrawals.md)
  {% endhint %}

## Non-custodial by design

At every stage, your funds sit either in the protocol's smart contracts or in the Chiliz network's staking system, never in a company wallet. Kayen cannot move your stCHZ, change the payout of a withdrawal you've already requested, or charge fees on your principal.

## Things to keep in mind

* Validator performance affects yield. \
  Validators can be slashed or jailed by the network; Kayen screens them, but their performance is ultimately determined on-chain, outside Kayen's control.
* Exiting via the queue takes time. \
  The unbonding period (\~2–3 days) is set by the network and could change.
* stCHZ's market price can differ from its redemption value. \
  On a DEX, stCHZ may trade slightly above or below what it's redeemable for through the queue.