What is staking crypto?

Staking crypto means locking up coins to help run a proof-of-stake blockchain, earning rewards in return for supporting network security. It matters because it turns idle holdings into a source of yield without selling them, while giving the network validators who process transactions honestly.

Here's how it works: you deposit tokens with a validator, who uses that stake as collateral to confirm transactions. If the validator behaves correctly, you earn a share of newly issued coins or fees. If they cheat or go offline, part of the stake can be slashed, or cut, as a penalty.

For example, staking 32 ETH lets you run your own Ethereum validator directly, currently earning a few percent annually. Most people stake smaller amounts through an exchange or pool instead. The tradeoff is a lock-up or unbonding period, often days to weeks, when your coins are illiquid. That illiquidity is exactly what liquid staking was built to solve.