Staking
Locking tokens to help secure a network or protocol in exchange for rewards.
Staking is the process of locking tokens to participate in network security or protocol operations. In Proof of Stake systems, validators stake tokens to propose and attest to blocks. Some DeFi protocols also use staking to align incentives (e.g., governance or revenue sharing).
"A validator stakes 32 ETH to participate in block proposals and attestations on a PoS chain; delegators can stake via staking pools."
Risks include slashing for downtime or misbehavior, smart contract risk (when staking via liquid or pooled products), and lockup/illiquidity. Yields can vary with fees, inflation, and network performance.
"A delegator using a liquid staking token faces smart contract risk and potential depeg during stress events."
Related Terms
Proof of Stake
→A consensus algorithm where one's stake in the cryptocurrency is used to validate transactions and create new blocks, offering an energy-efficient alternative to Proof of Work.
Validator
→A participant in a Proof of Stake (or similar) system who proposes and attests to blocks, often bonded by a stake.
Staking Rewards
→The payouts validators or delegators earn for securing a PoS network or staking in a protocol.
All terms and definitions may update as the Cryptionary improves.
