staking

Staking is the act of locking up some of a blockchain's coins as a security deposit, in order to help run a proof-of-stake network and earn rewards for doing so. Your staked coins are not spent or given away — they are set aside as a bond that vouches for your good behavior. In return for putting that capital to work securing the chain, the protocol pays you a share of newly issued coins and transaction fees.

The deposit cuts both ways, and that is the whole point. While your stake is locked, you are expected to validate honestly; if you do, you collect steady rewards roughly in proportion to how much you staked. But if the software you run misbehaves — signing conflicting blocks, or staying offline too long — a portion of your deposit can be automatically forfeited, a penalty known as slashing. Skin in the game is what makes your participation trustworthy to everyone else.

Because running a full validator can require a large minimum deposit, many people stake through pools or services that combine lots of small contributions and share the rewards. Some of these offer liquid staking, handing you a tradeable token that represents your locked stake so your capital is not completely frozen. Either way, staking is the mechanism that turns ordinary coin holders into the workforce that keeps a proof-of-stake blockchain secure.