Staking rewards encourage users to lock tokens in a protocol, increasing token demand and circulating value stability. By participating, users earn passive income, creating incentives for long-term holding rather than short-term speculation. This strengthens liquidity for lending, trading, or other DeFi functions, enhancing network health. Protocols can also offer governance voting rights, giving stakers influence over protocol decisions. Properly structured staking rewards align user incentives with platform growth while reducing token sell pressure. Transparent communication and sustainable reward rates are essential to maintain community trust and adoption over time.
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