Staking refers to the process of holding or locking up a certain amount of cryptocurrency tokens or coins to participate in a blockchain network’s consensus mechanism and earn rewards.
When you stake your cryptocurrency tokens, you essentially lend them to the blockchain network as collateral. In exchange, you are given the opportunity to participate in the network’s consensus mechanism and validate transactions, which helps secure the network. By doing so, you can earn rewards in the form of additional cryptocurrency tokens or coins.
The rewards you can earn through staking vary depending on the specific blockchain network and the amount of cryptocurrency tokens you have staked. Some networks offer fixed rewards, while others use a variable reward system based on the network’s performance and the number of staked tokens.
Staking is becoming increasingly popular as more blockchain networks adopt this consensus mechanism. It is seen as a way to earn passive income from holding cryptocurrencies, as well as a way to support the network and contribute to its security. However, staking also carries risks, such as the potential for the value of the staked tokens to decrease or for the network to fail.