Staking (Crypto)

The process of locking up cryptocurrency tokens to support the operations of a proof-of-stake blockchain network in exchange for rewards, similar in concept to earning interest. Ethereum transitioned from proof-of-work to proof-of-stake in September 2022 ("The Merge"), making staking central to the second-largest cryptocurrency network. Staking yields vary by network and validator, and risks include slashing penalties for validator misbehavior, lock-up periods during which tokens cannot be sold, and smart contract vulnerabilities.