Currently, the Delegation struct in the staking_pool contract does not have store . This makes it really hard for a permissionless liquid staking protocol to exist.
Sui’s proof-of-stake mechanism has been built in an user-friendly way such that anyone can participate by delegating SUI tokens to their validator of choice directly from their wallet address — and without losing custody of the underlying SUI tokens. For this reason, we want Sui’s community and builders to focus on exploring Sui’s strengths, such as avoiding the need of liquid staking solutions to seamlessly participate in the staking process and support Sui decentralization. In addition, limiting the amount of leverage available on the Sui protocol is conducive towards building financial products with real utility.
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Hmmm. There appears to be a contradiction as the SUI Foundation grant suggests liquid staking as a potential theme for a grant. 
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Also, as a researcher and enthusiast, I have always been curious and intrigued by delving deep into various topics.
While, not an expert on liquid staking, as a common user I have realised how beneficial Liquid Staking could be, having used similar platforms on ETH, MATIC and SOL.
This has seamlessly been integrated into my workflow especially when time could be limited for me to efficiently rotate my stake around different validators (full-time job elsewhere, crypto as a hobby). In addition, there is the added benefit of liquidity, a premium that some people are willing to embrace, especially in the crypto space.
Just my 2 cents on this. 
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@econmysten With no disrespect, but the whole point of Proof-of-Stake network is to enable tokens to stake and help scale the network without compromising the initial token utility and value. And the liquid staking plays a key pillar in this new vision.
If you are aware of the history of liquid staking, you will realize this was invented because staker found it really inefficient and unpractical to stake without receiving back a certificate. A good real-world reference is, users go to the bank to deposit their cash and shall receive an account balance (the certificate) and they can use this proof to borrow/lend and explore other defi leverage elsewhere. Discourage liquid staking to some extend is like encouraging users to stake without providing a certificate - even worst - what if some staking service rug pulled and went away with all users’ funds? who to blame and how to track each user’s lose?
As one of the defi builders in the space, with no disrespect but I found this rather funny to make such a statement " liquid staking is not encouraged". It not only kills lots of defi builders building on Sui - liquid staking protocol but puts an arrow into the defi design - liquid staking provides the basic sui token’s leverage and could scale up the network TVL and value much higher, making sui network competitive with Eth, BNB chains, Polygon chains and etc.
I have project founders chatting with tier one VCs and almost closed on them - not until he/she mentioned such a thread in their talks - the tier one VCs found it bizarre and funny - ended up pulling off the deal because of what this thread is talking about.
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100% agree with you. I’m not sold on this thread at all and it definitely kills more opportunities on Defi. As a founder/builder on Sui, this thread deeply concerns me.
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Liquid Staking is alive and well on Sui. In fact, Aftermath Finance will be launching afSUI in the upcoming weeks and have written a thread about it recently:
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This is very interesting.
Have tried their testnet too, but realise they used an external address to store users’ SUI first before delegating it to validators. Wouldn’t this kind of pose some form of centralised risk and making it Unsafe? (same sentiments by others as well on TG, screenshot below).
Correct me if I am wrong, but instead of reducing risks, this implementation INCREASES the risks for users. I guess this is perhaps just a limitation of SUI’s current architecture.
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If the delegated object is soulbound and can’t be traded, the way to do liquid staking services is through running a cranker. Users need to trust the operator being honest, that’s not gonna be scalable in the long run.
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