What is Staking?
Locking cryptocurrency in a protocol to earn rewards and/or support network operations.
Staking Explained
Staking is the process of locking tokens in a cryptocurrency protocol to earn rewards. In proof-of-stake networks, staking secures the blockchain. In DeFi protocols like Floops, staking aligns user incentives with the protocol by offering rewards in exchange for locking tokens. Stakers typically receive a share of protocol fees or newly minted tokens as compensation.
Key Characteristics
- Earn passive income on held tokens
- May involve lock-up periods
- Rewards vary by protocol
- Reduces circulating supply
Real-World Example
Staking 10,000 FLPS in the Floops vault entitles you to a pro-rata share of all SOL trading fees collected by the protocol, distributed proportionally to your stake.
Related Terms
Frequently Asked Questions
What does Staking mean?
Locking cryptocurrency in a protocol to earn rewards and/or support network operations.
How does Staking work in DeFi?
Staking is the process of locking tokens in a cryptocurrency protocol to earn rewards. In proof-of-stake networks, staking secures the blockchain. In DeFi protocols like Floops, staking aligns user incentives with the protocol by offering rewards in exchange for locking tokens. Stakers typically receive a share of protocol fees or newly minted tokens as compensation.
Can you give an example of Staking?
Staking 10,000 FLPS in the Floops vault entitles you to a pro-rata share of all SOL trading fees collected by the protocol, distributed proportionally to your stake.
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