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"Staking in crypto parlance involves posting a digital asset like ether to a blockchain as collateral in exchange for the right to process transactions and earn in-kind rewards like tokens. Staked tokens are normally locked up for a period of time so they can't be immediately withdrawn and cause a run on the platform. Liquid Staking, by contrast, allows holders of tokens like ether the opportunity to use a tracking token of sorts for trading while the underlying token is still sitting "staked" on the blockchain, continuing to earn yield. In some ways it allows crypto investors the chance to have their cake, or "stake," and eat it too."

Almost all of the firms that have submitted spot Ethereum (ETH) exchange-traded fund (ETF) applications with the U.S. Securities and Exchange Commission (SEC) have amended the applications to remove the possibility of staking. staking allows ETH holders to earn yield on their holdings, a feature of proof-of-stake (POS) cryptocurrencies. ETH holders need to lock in their holdings for a set period to support the blockchain operations in exchange for the reward. However, the SEC sees staking as an illegal offering by crypto platforms, as it can be seen as the offering of unregistered securities. This is fueling optimism that the SEC will soon approve most of the applications.

The European Blockchain Association published a joint industry position paper on staking in a European Union (EU) regulatory context. To date, there is no uniform consensus on how this process and its various manifestations are to be defined in concrete terms, which has led to legal uncertainty, sometimes with considerable consequences. The paper aims to make a clear distinction between staking and lending depending on the actual underlying technical process, and to differentiate between the different types of staking.

Crypto exchange Kraken will "immediately" end its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities. staking is a process in which investors lock up their crypto tokens with a blockchain validator with the goal of being rewarded with new tokens when their staked crypto tokens become part of the process for validating data for the blockchain. The SEC alleged that Kraken was offering investment contracts in exchange for investors' tokens, without providing the proper disclosures and safeguards required by US securities laws. https://www.sec.gov/news/press-release/2023-25

Fidelity Investments updated its application to the U.S. Securities and Exchange Commission (SEC) for a spot Ethereum (ETH) exchange-traded fund (ETF) to include the ability to stake. According to the amendment "the Sponsor may, from time to time, stake a portion of the Fund's assets through one or more trusted staking providers, which may include an affiliate of the Sponsor". Fidelity made its initial application in November. Other potential issuers include BlackRock, Ark Invest and 21Shares, and Grayscale.

The Ethereum network currently has a proof-of-work (PoW) consensus mechanism and in time, the protocol plans to fully transition into a proof-of-stake (PoS) network. The authors of this paper believe there are three attack vectors on a PoS Ethereum blockchain, by combining techniques from two recently presented attacks on PoS Ethereum: one where short-range reorganizations of the underlying consensus chain are used to increase individual validators' profits and delay consensus decisions, and one where adversarial network delay is leveraged to stall consensus decisions indefinitely. The proposed third attack vector considerably relaxing the requirements on adversarial stake and network timing, and thus rendering the attacks more severe. It allows an adversary with vanishingly small fraction of stake and no control over network message propagation to cause even long-range consensus chain reorganizations. Honest-but-rational or ideologically motivated validators could use this attack to increase their profits or stall the protocol, threatening incentive alignment and security of PoS Ethereum. The attack can also lead to destabilization of consensus from congestion in vote processing.

"Yield farming, or liquidity farming, is the act of lending or staking your cryptocurrency into a liquidity pool, through DeFi (Decentralized Finance) to receive rewards such as interest and more of their staked cryptocurrency. Similar to traditional staking, it can be seen as the equivalent of lending fiat money to a bank."

According to Coinbase "Staking is not a security under the US Securities Act, nor under the Howey test. Trying to superimpose securities law onto a process like Staking doesn't help consumers at all and instead imposes unnecessarily aggressive mandates that will prevent US consumers from accessing basic crypto services and push users to offshore, unregulated platforms."

Rather than relying on a proof-of-work consensus protocol, ethereum 2.0 will rely on a proof-of-stake consensus protocol whereby validators stake their own funds and attest to blocks and transactions being created on the network.

We develop a theory of long-run equilibrium in blockchain-based financial systems. Our theory elucidates the key market design features that separate proof of work and proof of stake approaches in the long run. Under proof of work, wasteful computation is used to secure the system, and users' utility in equilibrium is determined by the threat of a fork. Under proof of stake, by contrast, users' utility in equilibrium is generally above the fork threat level because custodians can use relational contracts to incentivize a higher quality of service. Relational contracts under proof of stake rely only on local institutions - but combining them with cryptography can create a platform for formal global contracts.

After eight years of promises the merge of the ETH blockchain into the new Beacon Chain system, formerly ETH2, is scheduled for some time between 15 and 20 September 2022. If it happens this time, then hooray! Proof-of-work mining is a crime against humanity. Using a country's worth of electricity, and thus pumping huge amounts of carbon dioxide into the air, is unconscionable. But that won't suddenly make cryptocurrency good. Proof-of-stake still doesn't fix all the other problems with Ethereum, or cryptocurrency more broadly. For example, decentralisation is always fake. Proof-of-stake pretends to change that - and it just doesn't.

On September 15, 2022 the Ethereum blockchain merged with a special-purpose decentralized ledger called the Beacon Chain, concluding its transition to near-carbon neutrality. Since its inception, Ethereum has been based on the energy-intensive proof-of-work (PoW) system. Now it will run on a proof-of-stake (PoS) system in which miners have been replaced with validators, who pledge, or stake, ether tokens as collateral to verify transactions and accrue interest on the staked assets as a reward. As a result, the network's energy usage should drop by more than 99%, according to the Ethereum Foundation.

The Thai Securities and Exchange Commission is seeking public comments on a proposal to prohibit businesses from crypto staking and lending activities. More specifically, businesses cannot accept "deposits of digital assets from the customers and lend, invest, stake or employ such digital assets." Moreover, they are prohibited from "providing support to third parties that undertake crypto saving and lending services, including marketing."

U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler reportedly has said that staked crypto-assets may be subject to federal securities regulations, in the wake of Ethereum's transition from a proof-of-work (PoW) to proof-of-stake (PoS) protocol. He reportedly said that PoS crypto-assets pass the Howey test under which an asset is considered an "investment contract" if investors pledge their money to a common enterprise with an expectation of a profit to be derived from the efforts of others. Adam Levitin runs through the Howey test logic that would deem Ethereum to now be a security for SEC purposes.

Ethereum is days away from a pivotal upgrade that could lure billions of dollars into its native token. But Ether has already attracted the attention of US SEC Chair Gary Gensler, who says that cryptocurrencies like it ought to be regulated as securities. That's an opposing stance to CFTC Chair Rostin Behnam, who insists that Ether's a commodity. Ethereum's software upgrade next week has only raised the stakes in that debate. That's because the April 12 'Shanghai' update will allow users to withdraw Ether that they "staked" or deposited on the blockchain. The move follows Ethereum's long-awaited 'Merge' upgrade in September that initially allowed users to "stake" coins to earn passive income - much like fixed deposits at a bank. Now, Shanghai will allow them to take those coins out, plus any interest earned.

CoinMetrics has published an analysis of the potential Ethereum (ETH) network impact of the U.S. Securities & Exchange Commission (SEC) May 23, 2024 approval of spot ETH exchange traded funds (ETFs). An important condition of the approval was that such ETFs will not be able to stake the tokens, which could shrink circulating supply, and improve the health of Ethereum's consensus layer and the staking ecosystem as a whole.

"Staking is a method of putting your cryptocurrency to work and earning incentives."

US SEC Commissioner Hester Pierce publicly rebuked her own agency over the shutdown of crypto exchange Kraken's crypto staking program in the United States, arguing that regulation by enforcement "is not an efficient or fair way of regulating" an emerging industry. "Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating. Moreover, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it." https://www.sec.gov/news/statement/peirce-statement-kraken-020923

The number of projects utilizing a proof-of-stake governance mechanism has increased recently, as new projects hope to increase scalability and reduce the high energy consumption often associated with proof-of-work networks.

Telegram's TON blockchain is designed as a proof-of-stake protocol with the support of multiple "shardchains." Validators, chosen from among those users who stake considerable amounts of tokens, will confirm the blocks.