Definition
Staking involves committing crypto assets to a blockchain network to support validation, security, and governance. Stakers earn rewards (typically 3-15% APY) from transaction fees and/or new token issuance. Liquid staking derivatives (like stETH for Ethereum) allow staked assets to remain liquid and usable in DeFi. Staking risk includes slashing, smart contract bugs, and lock-up periods.
lightbulb Example
An investor stakes 10 ETH through a liquid staking protocol, receiving 10 stETH (tradeable derivative). They earn 4.5% APY staking rewards while using stETH as collateral in a DeFi lending protocol for additional yield.
verified_user Key Points
- Lock crypto to support network security
- Earn rewards: typically 3-15% APY
- Liquid staking allows staked assets to remain usable
- Risks: slashing, smart contract bugs, lock-up periods