Staking is an algorithm (POF, Proof of Stake) where holders of a currency are rewarded for keeping their assets in a wallet. It's usually within a specific time frame.
This is done to encourage investors and contributors to Hodl, and hence reduce the amount in circulation, and limited supply leads to increase in value of demand increases.
This model is not sustainable, it could keep the vale high for the short-term, but the extra amounts is increasing the assets of holders and when they choose to trade it could cause a massive shift in the market.
Some projects require you own a masternode to be able to stake.
This favours the whales as they get more assets. And their influence on the market increases. (This is a little posts I made about whales,
https://bitcointalk.org/index.php?topic=5032867.msg45911800#msg45911800 )
Deflationary model us one where a project is built on a platform geared at reducing the supply of a currency infinitely.
In most cases the coin or token is used to fuel the platform, and pay for services. And are consequently burned to reduce circulating supply and drive the price up.
This model is more sustainable and favour investors of all scales, and encourages long-term Hodl. It can be run using DAG algorithm (Direct Acyclic Graph)
Staking can also be successful if the staking and mining rewards are fixed. Like bitcoin where the total supply is fixed. And it alap tuns on the pOW (proof of Work) algorithm
