Simple Definition of Staking
  • A process that involves committing your crypto assets to support a blockchain and confirming transactions
  • Your crypto earns rewards while being staked over time
How does Staking work?
  • If a cryptocurrency you own allows staking, this usually happens via a “staking pool” which you can think of as being similar to an interest-bearing savings account.
  • The reason your crypto earns rewards while staked is because the blockchain puts it to work.
    • Cryptocurrencies that allow staking use a “consensus mechanism” called Proof of Stake, which is the way they ensure that all transactions are verified and secured without a bank or payment processor in the middle. Your crypto, if you choose to stake it, becomes part of that process.
Yield Farming vs Staking vs Liquidity Mining
  • Staking locks crypto for the network to function in return of fees
  • Yield farming involves lending your money in return of interest through fees (like earning interest lending money to a bank)
  • Liquidity Farming is when you provide crypto to liquidity pools and in return get Native/LP tokens + Governance Tokens
  • Yield Farming is a subset of staking
    • While yield farming supplies liquidity to a DeFi protocol in exchange for yield, staking can refer to actions like locking up 32 ETH to become a validator node on the Ethereum 2.0 network.
    • Farmers actively seek out the maximum yield on their investments, switching between pools to enhance their returns.
  • Liquidity Mining is a subset of Yield Farming
    • The primary difference is that liquidity providers are compensated with the platform’s own coin in addition to fee revenue.
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Where can I learn more about Staking?

I would look into this page I made on Proof-of-Stake to see what is Staking and why it exists