Staking
MarketsDefinition
Locking up cryptocurrency to help secure a proof-of-stake blockchain in exchange for protocol rewards. Replaces mining as the consensus mechanism on PoS chains. Returns range 3-8% on Ethereum, 7-12% on Solana, 4-15% on smaller chains.
Risks: validator slashing for downtime/misbehavior, smart contract risk for liquid-staking tokens (stETH, rETH), and tax classification (rewards taxed as income at receipt in most jurisdictions).
Risks: validator slashing for downtime/misbehavior, smart contract risk for liquid-staking tokens (stETH, rETH), and tax classification (rewards taxed as income at receipt in most jurisdictions).