As some background, Cardano has a "liquid" staking model, which means that stake is never locked when it is being delegated. Other, "bonded" staking models require a locking period of various lengths (anywhere from days to months), which means the coins can not be moved and spent. I'm hoping a two-fold answer can be provided that discusses security and economics.
2 Answers
In my understanding, hardening the system by locking your coins is great. It has the disadvantage of not being a realistic economic policy, where the velocity of money (i.e. using it) is a must for sustainance. GDP = VELOCITY X MONETARY BASE, for example. Cardano solves this by taking snapshots of the locked coins, so the next epoch happens in, sort of, a parallel universe where all the tokens are locked, but lets the economy of the ecosystem be heakthy by letting then move freely. Then the next snapshot happens, and hence the system keeps being secure no matter if there is a large dump, things change hands or tokens are sold for fiat. I hope I made myself clear, otherwise let me know and I will give you a more structured answer.
Pros (advantages)
- Coins are not locked while staked and can be freely spent or transferred
- Staked coins do not slow the velocity of value transfer in the ecosystem
- Staking pools for existing wallets can be changed at any time
Cons (disadvantages)
- Coins will not be staked until the next staking snapshot occurs
- New wallets need to exist for a period of time before staking becomes active on them
- Existing wallets have a delay between changing staking pool and it taking effect
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Those cons largely apply to bonded staking as well, since time delays are part of the system. Another disadvantage is that liquid staking being a unique/novel concept requires education for each new ADA holder, specifically around re-defining the word "stake" May 4, 2021 at 16:17