Staking

In short

Locking crypto to validate transactions and earn rewards — like a crypto savings account

Staking lets you earn rewards by locking your crypto to help run the blockchain. Think of it like a savings account — you lock your coins and earn interest (staking rewards). ETH staking currently yields around 3-4% annually.

Staking involves locking proof-of-stake cryptocurrency to participate in network validation. Rewards (staking yield) are paid in the staked token. Risks: lock-up periods, slashing (penalty for validator misbehavior), and token price risk. Available natively or through liquid staking protocols.

Formula

Staking APY = Annual Rewards ÷ Total Staked Value × 100

Related concepts

DeFi (Decentralized Finance) — DeFi is like a bank that runs on code with no employees. You can borrow, lend, trade, and earn interest — all automatically through smart contracts. No bank account needed, no identity verification, just a crypto wallet.
Liquidity Pool — A liquidity pool is a pot of two tokens that lets traders swap between them automatically. You provide the tokens and earn a share of trading fees. Risk: 'impermanent loss' if the prices of the two tokens diverge significantly.
On-Chain Metrics — Unlike stocks, crypto blockchains are public. You can see exactly how many coins are moving, who holds what, and how network activity is changing. When on-chain activity rises before price, it can signal upcoming moves.