Definition
Staking is the commitment of cryptoassets to participate in a proof-of-stake network’s security and consensus process. Validators perform duties such as checking transactions and proposing or confirming blocks, with their stake subject to the network’s rules.
How It Works
A holder may operate a validator directly or participate through delegation, a pool or a service, depending on the network. Rewards can come from protocol issuance and transaction-related payments. These routes have different custody arrangements and operating requirements; a service can introduce additional contracts and intermediaries between the holder and the network.
Key Considerations
Reward rates vary, and penalties or slashing may apply under specified conditions. Unstaking can require a waiting period, and token price declines can exceed earned rewards. Some products use “staking” for deposits that do not secure blockchain consensus. Understanding the source of the return is necessary to distinguish native staking from lending or promotional reward programs.