How it works
You lock tokens in a smart contract or with a validator. The network uses your stake as economic collateral to secure consensus: if the validator misbehaves, part of your stake is slashed. In return, the network pays a yield, typically 3 to 8 percent per year denominated in the staked token.
Example
You stake 10 ETH at a 4 percent annual yield. After one year you have 10.4 ETH, before any change in ETH’s USD price. If ETH rises 50 percent during the year, your USD value rises about 56 percent (price + yield compounded). If ETH falls 50 percent, you still hold 10.4 ETH but at a much lower USD value. Yield does not protect against price risk.
Why it matters
Staking turns idle holdings into yield-bearing assets without selling. The trade-off is liquidity: most networks impose a 1 to 28-day unbonding period. Liquid staking tokens (stETH, rETH) solve this by issuing a tradeable receipt, at the cost of smart-contract risk.
