Staking Token

In many networks, such as Ethereum, the same token is used for staking and paying for gas. In the Avalanche network staking tokens and gas tokens can be separated, since they fullfil different purposes within the blockchain ecosystem.

Staking tokens are used for securing public permissionless Avalanche L1s through a proof-of-stake (PoS) consensus mechanism. Holders of staking tokens can run validators and participate in the consensus process by staking a certain amount of tokens as collateral.

Validators propose and validate new blocks of your L1 blockchain. Staking tokens play a crucial role in maintaining network security and incentivizing their participation.

Not all Avalanche L1s are public and permissionless. Many enterprises choose a Proof-of-Authority setup, where the validators are selected by the enterprise. These blockchains do not have a staking token.