What is Deposit Contract?

A deposit contract is a smart contract that allows users to deposit cryptocurrency into a blockchain protocol, often via a validator node. While deposit contracts typically allow users to deposit tokens into a validator node to help maintain the operational efficiency of the network, they can also sometimes be used within a decentralized finance (DeFi) protocol that allows for the use of specific financial instruments (such as staking, lending, and borrowing), enabling users to accrue incentivized token rewards.