Staking & Liquid Staking Key Terms
Some key terms related to Staking & Liquid Staking worth noting include:
- Staking: The process of locking up tokens to secure a Proof-of-Stake (PoS) blockchain and earn rewards.
- Validator: A network participant who stakes assets and is responsible for processing transactions and securing the blockchain.
- Delegated Staking: A method where users stake their assets through a validator instead of running their own node.
- Slashing: A penalty mechanism that reduces a validator’s stake if they act maliciously or fail to maintain uptime.
- Liquid Staking: A staking method where users receive liquid staking tokens (LSTs) representing their staked assets, allowing them to remain liquid while earning staking rewards.
- Liquid Staking Token (LST): A tokenized receipt of staked assets, such as stETH, rETH, or jSOL that can be used in DeFi.
These are useful terms to know as they are common in Decentralized Finance and may be referenced across other Web3 verticals.
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