![]() “In PoS, validators stake their assets as a skin-in-the-game, which gets slashed or destroyed if they behave maliciously,” says Gritt Trakulhoon, lead crypto analyst for Titan, an investment platform. Typically, the bigger the stake, the greater chance validators get to add new blocks and earn rewards. Staking is how proof of stake cryptocurrencies cultivate a functioning ecosystem on their networks. Popular cryptocurrencies Solana (SOL) and Ethereum (ETH) use staking as part of their consensus mechanisms. But if they validate correct, legitimate transactions and data, they earn more crypto as a reward. If they improperly validate flawed or fraudulent data, they may lose some or all of their stake as a penalty. Participants trying to earn a chance to validate new transactions offer to lock up sums of cryptocurrency in staking as a form of insurance. Staking helps ensure that only legitimate data and transactions are added to a blockchain. Under this system, network participants who want to support the blockchain by validating new transactions and adding new blocks must “stake” set sums of cryptocurrency. Many blockchains use a proof of stake consensus mechanism. ![]() In return for staking your crypto, you earn more cryptocurrency. ![]() Staking is when you lock crypto assets for a set period of time to help support the operation of a blockchain.
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