Crypto staking is the process of locking cryptocurrency in a blockchain network to support operations like validating transactions and securing the network, in exchange for rewards. Used primarily in Proof-of-Stake (PoS) blockchains, staking replaces the energy-intensive mining of Proof-of-Work systems. Stakers earn yield (typically 3-15% annually) but must lock tokens for specific periods and risk losing some stake if validators act maliciously... a penalty called "slashing."
Example:
An investor stakes 32 ETH to run an Ethereum validator node. They earn roughly 4% annual yield, generating about 1.28 ETH per year in staking rewards. However, if their validator goes offline frequently or validates malicious transactions, they risk losing a portion of their staked ETH through slashing penalties.