In crypto assets, staking is the act of time-locking stablecoin in a smart-contracts, typically with the promise of a yield or side payment of a governance-token as a result of depositing the cryptoassets with the third party.

This behaves somewhat like a cd except the depository institution has no legal obligation to guarantees to custody funds or pay out said payments as it exists as a form of regulatory-arbitrage outsde the regulatory perimeter.

Staking is a common building block in many so-called DeFi protocols.

See also counterparty risk, bank run, Ponzi scheme.


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