What Is Staking?

Staking is the process of locking cryptocurrency into a smart contract to participate in blockchain network validation, particularly on proof-of-stake networks like Ethereum. Stakers deposit assets as collateral and earn rewards for validating transactions and proposing blocks. Unlike yield farming, staking directly secures the blockchain network rather than earning fees from liquidity provision. Liquid staking derivatives allow users to earn staking rewards while retaining access to their capital through tradable derivative tokens, making staking yields composable with other DeFi strategies.

See also

• Proof-of-stake

• Ether

• Ethereum

• Decentralised finance

• Yield farming

• Real yield

• Annual Percentage Yield (APY)