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What is staking?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
Staking means committing coins to help run a Proof of Stake network in return for rewards. Rewards are not guaranteed and the coin's price risk remains.
Key points
- Compensation for helping secure a PoS network
- Some networks lock funds for a period
- Price risk does not go away
Definition
Committing coins to block production and validation under Proof of Stake in exchange for rewards.
Exchange staking services let you take part without technical knowledge, but you take on that operator's credit risk while your coins sit there.
Do not judge on headline yield alone — check the lock-up, the unbonding period and which asset the reward is paid in.
Watch out for
- · Higher yields usually mean more price or counterparty risk, not free money