The 5 blockchain concepts institutional users should know

Institutions are entering the blockchain environment at a faster pace than ever, drawn by predictable yields, transparent on-chain records, and the ability to participate directly in network security. Yet staking introduces a new operational landscape. To manage risk and maintain compliance, teams need clarity on how staking actually behaves underneath.

Below are the five concepts every institutional participant should understand before allocating capital or offering staking services to clients.

1. Native staking

Native staking is the foundation of Proof of Stake. It describes the process of locking assets directly on their original blockchain to support validator operations. In return, delegators earn rewards that depend on several factors, including network inflation, validator commissions, and validator performance.

For institutions, native staking provides the most direct exposure to network economics. It is simple to understand and often carries the most predictable reward structure. It also strengthens the underlying network, improving decentralization and security.

Well-performing validator nodes are essential here. Uptime, infrastructure reliability, and security practices shape both rewards and risk. This is why institutional platforms increasingly rely on enterprise-grade operators with robust monitoring, transparent reporting, and certified infrastructure. Moonlet, for example, operates secure, high-availability validator nodes designed to support mission-critical staking activities.

2. Liquid staking

Liquid staking brings flexibility to the staking experience. Instead of locking tokens until they complete unbonding, users receive liquid staking tokens (LSTs) that represent their staked position. These LSTs can be traded, transferred, or used in other protocols while the original stake remains active.

Institutional benefits include:

• Liquidity: Tokens can be moved or deployed in strategies without waiting through the unbonding period.
• Additional yield LSTs can be used in lending markets, automated strategies, or treasury operations.
• Flexibility Institutions can rebalance positions without interrupting staking.

Liquid staking introduces its own considerations such as smart contract risk, liquidity depth, and peg stability. This is why many institutions combine native and liquid staking depending on internal risk frameworks.

3. Staking bonding and unbonding periods

Bonding is the action of signaling to a network that tokens should be staked. During the bonding period, the assets are not transferable and do not earn rewards. Once the validator activates the stake, rewards begin to accrue.

Unbonding is the process of unlocking staked tokens. Each blockchain defines its own waiting period, often ranging from a few days to several weeks. During unbonding, assets cannot be moved, traded, or used, and rewards stop. In many networks, even the rewards earned before unbonding become withdrawable only after this waiting period.

For institutions, these timelines influence liquidity planning, hedging, redemption policies, and client expectations. The ability to model these delays accurately is central to treasury and risk operations.

4. Slashing and risk protection

Slashing is the set of penalties that Proof of Stake networks enforce when validators violate consensus rules or behave negligently. It links validator behavior to financial consequences, ensuring that it becomes irrational to attack or destabilize the network.

Networks implement slashing differently:

• Ethereum focuses on provable harm such as double-signing or conflicting attestations.
• Cosmos chains penalize both double-signing and extended downtime.
• Solana penalizes malicious behavior such as double-signing.

Even though slashing is triggered by evidence rather than intent, it still affects delegators. This makes validator selection one of the most important risk decisions an institution can make. Strong operational practices, client diversity, secure key management, and 24/7 monitoring dramatically reduce exposure.

Platforms like Moonlet integrate audited infrastructure, AI-driven monitoring, and insurance coverage through partners such as Chainproof to help safeguard staked assets and lower operational risk .

5. Compliance and custody requirements

Institutions must determine whether they are using custodial or self-custodial staking. This decision shapes governance, operational workflows, reporting duties, and internal controls.

They also need providers whose infrastructure meets recognized security standards. 

Certifications such as ISO 27001 and SOC 2 Type I & II give assurance that operational processes, access controls, and data security are independently audited. Moonlet’s staking infrastructure is aligned with these frameworks, ensuring it can support institutional-grade requirements and transparent reporting .

Custody models define who controls the keys and how staking actions are authorized. Non-custodial models allow institutions to retain full control, with all staking actions executed directly on-chain. The best staking providers for institutions ensure full compliance and security. 

Takeaway for institutions 

Staking is becoming a core component of digital asset strategies for institutions. Understanding these five concepts helps teams navigate operational risk, liquidity constraints, compliance needs, and validator performance.

Moonlet is fully compliant with SOC 2 Type I & II and ISO 27001, operating under audited security frameworks that support institutional requirements. With enterprise-grade validator nodes, non-custodial staking tools, and real-time analytics, Moonlet offers the reliability needed to participate in Proof of Stake with confidence.

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Further reading: 

https://www.cube.exchange/what-is/slashing 

https://help.coinbase.com/en/prime/staking/unbonding 

https://trustwallet.com/blog/staking/liquid-staking-vs-native-staking