Technical Definition
Staking
Locking a proof-of-stake network's coin to help secure it, in exchange for a share of newly issued rewards.
By Crypto University Editorial
Proof of Stake · Validator · Slashing · Liquid Staking Token (LST) · APY (Annual Percentage Yield)
✦ Key Insight
It is one of the few yields in crypto paid by the protocol itself rather than by another user, but it carries lock-up, slashing and price risk on the staked asset.
✕ Common Misconceptions
Confusing protocol staking with a platform's "staking product", which may be lending in disguise and carries counterparty risk. Also ignoring that a yield paid in a falling asset can still be a loss.
Detailed Explanation
Staked coins act as a security deposit backing honest validation. In return, the network pays a yield funded by issuance and fees. Staked assets are usually subject to a delay before they can be withdrawn, and misbehaviour by the validator can cost part of the stake.
In Practice
“A holder stakes through a validator, earns rewards over several months, and then waits through an unbonding period before the principal becomes transferable again.”