From Staking to Restaking

Staking tokens plays a pivotal role in fortifying proof-of-stake blockchain networks such as Ethereum. In this mechanism, participants contribute to network security by staking their tokens, essentially placing them 'at stake,' and in return, they receive rewards for their participation. However, there is a risk involved as these staked tokens could be subject to 'slashing’, where they are deducted as a penalty if the participant's node engages in malicious activities or proves to be unreliable. While individual operators manage solo nodes, there is also the option for anyone to stake tokens through staking service providers, known as Staking-as-a-Service (SaaS) providers. This exposes them to similar risks but also enables them to partake in the rewards.

It is important to note that staked tokens cannot be traded or utilized as collateral to generate yield within the decentralized finance (DeFi) ecosystem. As a result, these staked tokens are deemed illiquid.