Crypto glossary
Staking
Staking is locking up cryptocurrency to help secure a proof-of-stake blockchain, in exchange for rewards paid in that network's native token.
On proof-of-stake networks such as Ethereum, Solana, Cardano and Polkadot, validators are selected according to the tokens staked behind them. Holders can stake by running their own validator, delegating to an operator, using an exchange service or buying a liquid staking token.
Rewards come from new token issuance and transaction fees and are usually expressed as an annual percentage. Yields vary by network and change with the total amount staked, and part of the return may simply offset the inflation of the token supply.
Risks include slashing penalties if a validator misbehaves, unbonding periods during which tokens cannot be sold, the price volatility of the staked asset and, with custodial services, the counterparty risk of the platform. Tax treatment of staking rewards also differs from country to country.
Example
If you stake 100 SOL with a validator offering an effective 7% annual yield, you would accumulate about 7 SOL in rewards over a year, minus the validator's commission.
Related terms
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