What is Staking?

Staking in the context of and (DeFi) refers to the process of locking up digital assets to support the operations of a blockchain network. It is widely used in various DeFi services, mechanisms, and models.

Staking serves as a key component in the DeFi ecosystem, providing a means for users to earn passive income, participate in governance, and contribute to the security and efficiency of blockchain networks.

Usage in DeFi Services

  • Yield Generation: Users stake assets in DeFi platforms to earn rewards, often in the form of additional tokens.
  • Provision: Staked assets can provide liquidity, facilitating trading and activities.

Governance Participation

  • Voting Rights: Staked assets often grant users voting rights, allowing them to participate in the governance decisions of the platform or .

Role in Consensus Mechanisms

  • Network Security: In Proof of Stake (PoS) and similar consensus models, staking contributes to the security and functionality of the blockchain.
  • Validator Incentives: Stakers can become validators, helping to process transactions and create new blocks, in return for rewards.

NEO Blockchain Example

  • Unique Approach: The NEO blockchain allows users to stake NEO tokens without locking the assets, offering a more flexible staking model.
  • Voting and Rewards: Users can vote for consensus nodes with their staked NEO, earning GAS tokens as rewards, akin to traditional staking benefits.