Definition ∞ On-chain staking is the process of directly locking up cryptocurrency assets on a proof-of-stake blockchain network to support its operations and earn rewards. Participants commit their tokens to a validator node, which then verifies transactions and adds new blocks to the chain. This mechanism contributes to the network’s security and decentralization. Stakers receive a portion of transaction fees or newly minted tokens as compensation.
Context ∞ The practice of on-chain staking is fundamental to the security and economic model of many modern blockchain protocols. Discussions often center on the balance between decentralization, validator participation, and the accessibility of staking for individual users. A key debate involves the potential for large staking pools to centralize control over network governance. Future protocol upgrades aim to enhance decentralization and reduce barriers to entry for independent validators.
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