Revenue-Backed Staking

Definition ∞ Revenue-backed staking is a mechanism where participants stake their tokens in a decentralized protocol to earn rewards derived directly from the protocol’s operational revenue, rather than from newly issued tokens. This revenue can originate from transaction fees, lending interest, or other economic activities within the protocol. This model offers a more sustainable and less inflationary yield compared to traditional token emission rewards. It aligns staker incentives with the protocol’s economic success.
Context ∞ Crypto news frequently discusses revenue-backed staking as a more sustainable alternative to inflationary staking models, particularly in the evolving decentralized finance (DeFi) landscape. Projects implementing this mechanism are often highlighted for their long-term economic viability and ability to provide genuine value accrual to token holders. Understanding this concept is important for evaluating the fundamental strength and sustainability of various staking protocols and their associated digital assets.