Definition ∞ Cryptocurrency staking is a process where participants lock up their digital assets in a blockchain network to support its operations and security. In proof-of-stake (PoS) systems, staking allows individuals to act as validators, verifying transactions and creating new blocks. In return for their contribution, stakers receive rewards, typically in the form of additional cryptocurrency. This mechanism incentivizes network participation and helps maintain the integrity of the blockchain.
Context ∞ Cryptocurrency staking is a prominent feature in the evolution of blockchain consensus mechanisms, especially following Ethereum’s transition to Proof of Stake. The regulatory treatment of staking rewards and services remains a key discussion point globally, impacting how institutions and individuals approach this activity. Future developments include liquid staking solutions that permit users to access their staked assets while still earning rewards. News often reports on changes in staking yields and the security implications of large staking pools.
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