What is crypto staking, and how does liquid staking work?

Proof-of-stake networks pay people to help secure them. You lock coins with a validator, which checks transactions and proposes blocks.

• Rewards: paid in the same coin. They come from new issuance and fees, not from nowhere.
• Slashing: a validator that cheats or misbehaves can lose part of its stake.
• Lockups: unstaking can take days or longer.
• Liquid staking: a pool stakes for you and gives you a token you can move or use in DeFi.

• The coin's price can fall more than the rewards earn.
• Exchange staking means the exchange holds your coins.
• Liquid staking tokens can trade below the coins they stand for.
• Re-using staked tokens in more apps (restaking) stacks risks on top of each other.
• Rewards may be taxable when received. See staking taxes.