Definition
Staking is a blockchain participation method where holders lock their tokens in a protocol to support network operations and security. It is most commonly associated with proof-of-stake and related consensus designs, where staked tokens help validate transactions and maintain the ledger. In exchange for committing funds and accepting certain protocol rules, participants typically receive staking rewards paid in the same or a related token. Staking can occur directly on a base blockchain or through decentralized finance protocols that integrate staking-like mechanisms.
As a concept in decentralized finance, staking often overlaps with earning yield through smart contracts that pool user funds. Protocols in the broader DeFi ecosystem, such as those focused on lending, liquidity provision, or governance, may incorporate staking to align incentives and encourage long-term participation. Staked positions are usually subject to conditions like minimum lock-up periods, withdrawal rules, or potential penalties defined by the underlying protocol. Overall, staking represents a way for token holders to commit capital to a network or application while passively accruing protocol-defined rewards.
Context and Usage
In practice, staking is used by blockchain networks and DeFi platforms to distribute rewards to participants who help secure or stabilize the system. DeFi protocols such as Maker, SushiSwap, Aave, and Compound may incorporate staking-like structures around their governance or liquidity tokens, where users lock tokens to support protocol functions and receive incentives. These arrangements can differ in technical details but share the core idea of committing tokens to a contract in return for yield.
Staking has also evolved into more complex forms, such as restaking, where already-staked assets are pledged again to additional protocols or services. This extends the basic staking concept by allowing the same economic stake to secure multiple layers of infrastructure, while still being governed by the rules of each protocol involved. Across these variations, staking remains fundamentally about bonding tokens to a system so that token holders share in both its risks and its reward distribution.