What is staking?

Staking is the process of locking up a digital asset (ATOM in the case of the Cosmso Hub) to provide economic security for a public blockchain. Public blockchains are permissionless networks, meaning anyone is free to participate in maintaining them. As a result, it would be possible for some of the maintainers of the network (called validators to act maliciously. To incentivise maintainers to behave in the best interest of the network, the locked-up assets are at risk of being partially slashed (destroyed) if there is evidence that a fault was committed.

Due to practical constraints of the software, the number of validators on the Cosmos Hub has to be capped (currently at 125). This restriction does not mean that ATOM holders that do not operate validators themselves can't participate in securing the network. In fact, ATOM are designed to let each holder participate in securing the network using a mechanism called delegation. When ATOM holders stake their ATOM, they must choose one or more validators to delegate to. Validators are then eligible for receiving rewards but are also be at [risk of slashing] if the validators they chose misbehave.