Staking is a strategy used across crypto and web3 that empowers users to participate in keeping a blockchain network honest and secure.
Locking up tokens is common across web3, and is often what’s happening when you see a reference to “staking” tokens. Users typically receive some sort of access, privilege, or reward over time in exchange for their lockup, and can withdraw their tokens as and when they wish.
There are already plenty of rewards programs in the world; imagine if you could lock up your airline miles and earn extra, or instead of a punch-hole card at your local coffee place, you lock up rewards tokens to get bags of coffee or a nice mug.
However, this form of depositing tokens for rewards on a DeFi platform isn’t actually staking.
Staking happens at the network level, and is all about securing the network.
Enter Ethereum’s Proof of Stake system. Anyone can choose to become a validator and lock up their ETH by depositing it into a smart contract—a program that runs on Ethereum’s blockchain.
With over 565,000 validators staking the standard 32 ETH each—more than $32 billion at today's rates—Ethereum's Proof of Stake (PoS) mechanism is the biggest example of staking in web3.
The computer equipment arms race and environmental challenge of PoW have now been negated by Proof of Stake (PoS). Under PoS, the network is secured by numerous parties depositing 32 ETH into a smart contract. The more tokens that are staked, the more expensive it become for a bad actor to attack the network. This deposit, or stake earns you the right to take part in building new blocks for the blockchain and to get rewarded in return. If you don’t play this role properly, though, some or all of your stake will be taken from you—a punishment known as “slashing”.
Shifting to PoS allowed Ethereum to maintain the security of its network and reduce carbon emissions by over 99.95%, compared with PoW.
There are lots of protocols out there that offer liquid staking options, and it is important to do your research about them before putting your hard-earned ETH into one.
For this reason, MetaMask offers users the convenience of accessing vetted liquid staking providers directly through MetaMask Portfolio for an intuitive experience.
So now you understand that staking is a public good that helps secure a blockchain network, and there are various ways to get involved.
What is Staking?
Staking is a fundamental mechanism to secure and maintain a blockchain network
Networks employing Proof of Stake (PoS) systems like Ethereum are more secure and sustainable than those employing Proof of Work (PoW) systems
Staking is a decentralized, public good that helps secure a network and enables me to get rewarded in return
Ready to take the next step?Explore MetaMask