📚Glossary
A helpful guide to the most important terms and definitions every staker should know.
Active Set
Group of validators that are currently selected to participate in block validation and consensus.
APY
Annual percentage yield, is a way of expressing the interest rate you’ll earn on your staked crypto. It is the effective annual rate of return that takes into account the compounding of interest. In other words, the APY means you will earn interest on both the sum you originally staked. The subsequent interest you earn on that sum – is known as compounding.
APR
Approximate yearly reward you are likely to get from staking, and it is expressed in percentage form. It basically gives you the ability to compare the different staking opportunities with regard to the possible returns. The defining feature of this measure is calculating that interest over time. The rate applies to the staked sum only, and does not compound interest earned on that sum over time.
Auto-Compounding
Feature that automatically reinvests your staking rewards, and in time, your earnings would grow exponentially. It's a "set it and forget it" approach that maximizes your staking yields, supercharging your rewards with absolutely no manual intervention
Commission (fee)
The percentage of staking rewards that the validator takes as a fee before distributing the remaining rewards to delegators.
Delegator
An individual or entity that delegates their tokens to a validator in exchange for staking rewards.
Epoch
An epoch (or era, or cycle, depending on the protocol) is a standardized period of time used by blockchain networks to organize key processes such as validator selection, reward distribution, and consensus updates.
Governance
On-chain or off-chain processes allowing token holders to vote on protocol upgrades and policies.
Liquid Staking
Staking coins means committing them to a given network or protocol. During that time you can’t use those coins for other things such as trading; they are illiquid. Liquid staking platforms, like Lido, pose an alternative to that. Providing staking participants with a composable “receipt” for their staked coins. This receipt is a tokenized representation of the staked coins. It can be used elsewhere in the DeFi system, for trading or as collateral. Liquid staking enables you to benefit from staking rewards. Without losing out on the other opportunities your staked coins might have offered you.
Restaking
Act of leveraging staked assets to provide security to multiple services simultaneously, increasing capital efficiency but introducing additional risks.
Reward Frequency
How often staking rewards are distributed (e.g., per block, daily, etc.).
Self Bond
Refers to the portion of tokens that a validator locks up from their own wallet to support their own validator node.
Slashing
The blockchain's way of keeping things remain fair. If validators misbehave or try to cheat, they are likely to lose a portion of their staked coins. It's worth noting that a validator can lose both its investment and the stake of the individuals who decided to delegate to him. Slashing is a vital part of any proof-of-stake protocol. By acting as a security deposit, it helps to keep validators in check. Guaranteeing the smooth running of the network as a whole.
Stake
The amount of cryptocurrency locked or delegated by a user to support network operations.
Stake activation time
Delay between staking tokens and when they become active and eligible to earn rewards.
Stake lock-up time
Period during which staked assets are locked and cannot be moved, often matching the unbonding period.
Staking Rewards
Incentives earned for participating in network consensus, usually paid in the native token. Staking rewards are the incentive paid to individuals for either staking their coins directly on a network, or for contributing coins to a staking pool.
Unbonding time
Period during which staked assets are locked and cannot be moved, often matching the unbonding period.
Unstake
The process of withdrawing tokens that were previously staked, often triggering a cooldown period.
Validator
Validators propose and confirm new blocks, verify transactions, and help secure the network