Staking is a process that lets users earn returns on their cryptocurrency holdings. Users can stake their tokens by locking them in their crypto wallets or on crypto exchanges. The blockchain then uses the tokens held or staked in such interfaces to support its operations and security.
Unlike trading cryptocurrencies on exchanges to generate profits, staking offers a less risky and more convenient way for users to put their digital assets to work and earn passive income. Only cryptocurrencies designed on blockchains with a Proof of Stake (PoS) consensus mechanism can be staked. Users earn rewards for staking whenever a new block gets added to the blockchain, resulting in the minting of new cryptocurrency tokens.