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Unbonding period

The waiting time between requesting your staked coins back and being able to move or sell them.

Chains delay unstaking so that a validator cannot misbehave and immediately escape slashing. The delay runs from a few days to several weeks depending on the protocol and on how long the exit queue is.

For a trader this is illiquidity risk with a precise number attached. Staked coins cannot be sold during a crash, and the queue tends to lengthen exactly when everyone wants out at once.

Example: a 21-day unbonding period on a coin that falls 40% during those three weeks costs you the entire decline with no ability to act. liquid-staking exists partly to solve this, by giving you a tradable receipt token, but that token can trade at a discount under stress.

Related: staking, liquid-staking, slashing, epoch

Educational only, not advice. Spotted an error? Post in Site Feedback.