Bitcoin staking refers to the practice of committing Bitcoin holdings to support the operations of a proof-of-stake blockchain, typically through a wrapped version of Bitcoin on another network. While native Bitcoin uses proof-of-work, staking involves locking up assets to earn rewards for participating in transaction validation. This mechanism provides a way for Bitcoin holders to earn passive income, distinct from traditional mining. It contributes to the security and decentralization of the staking network.
Context
The concept of Bitcoin staking is a prominent topic in discussions about expanding Bitcoin’s utility beyond a store of value. It involves significant debate regarding the risks and benefits of using wrapped assets on other chains. Future developments may see more direct or innovative ways for Bitcoin to participate in staking economies, enhancing its role in decentralized finance.
Starknet's BTCFi initiative introduces the first fully trustless Bitcoin staking on an L2, unlocking significant capital efficiency for BTC holders within decentralized finance.
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