Staking Guides

Staking lets you earn rewards by locking crypto to help secure blockchain networks. Think of it as earning interest on a savings account, but for cryptocurrency. Ethereum staking currently offers 3.2-4.1% annual returns. Some smaller networks offer 8-15%.

These 5 guides explain how staking works, which networks offer it, how to evaluate validators, and different ways to stake (solo, pooled, liquid). You'll learn realistic return expectations and risks involved.

Start with Staking Explained to understand fundamentals. Then explore Ethereum Staking if you hold ETH. Learn validator selection before staking serious amounts.

Staking is how Proof-of-Stake blockchains maintain security and consensus. Instead of miners competing with computing power (Proof-of-Work), validators stake coins as collateral. The network rewards them for honest behavior, slashes (penalizes) them for dishonest behavior.

How Proof-of-Stake Works

Validators lock coins (stake them) and run network nodes. The protocol randomly selects validators to propose new blocks and verify others' proposals. Validators earn fees and newly minted coins as rewards.

If a validator acts maliciously (double-signing blocks, staying offline too long), the network slashes part of their staked coins. This economic incentive keeps validators honest - they'd lose more from slashing than they'd gain from cheating.

Why Networks Pay Stakers

Stakers provide critical infrastructure. They validate transactions, propose new blocks, store blockchain data, and maintain network security. Rewards compensate for hardware costs, electricity, and capital lockup risk.

Unlike traditional interest (banks lending your money), staking rewards come from transaction fees users pay plus protocol inflation. Ethereum burns most fees (deflationary) and issues small amount of new ETH to stakers (currently ~0.5% annual inflation).

Staking vs Mining vs Holding

Mining (PoW): Buy expensive hardware, pay electricity bills, compete for block rewards. Bitcoin and Litecoin use mining. Profitable only with cheap electricity and scale.

Staking (PoS): Lock existing coins, run validator or delegate to one. Earn predictable yield. Lower barriers than mining. Ethereum, Cardano, Solana use staking.

Holding: Buy and hold coins without staking. No rewards but maximum liquidity and flexibility. Your coins remain available to sell anytime.

Different networks offer different yields, lock-up periods, and minimum requirements. Choose based on coins you already hold and risk tolerance:

Ethereum: The Dominant Staking Network

Since The Merge in September 2022, Ethereum runs on Proof-of-Stake. Over 28 million ETH staked (23% of supply) as of January 2026. Rewards fluctuate based on network activity and number of validators.

Solo staking requires 32 ETH ($80k at $2,500/ETH) plus technical knowledge to run validator. Most people use staking pools (Lido, Rocket Pool) or exchange staking (Coinbase, Kraken) which accept any amount.

Smaller Networks With Higher Yields

Cosmos, Polkadot, and newer networks offer 10-20% APY to attract stakers. Sounds attractive but these networks have smaller market caps (higher volatility) and less battle-tested security.

Example: 15% APY on a coin that drops 40% in value = you lost money overall. Staking rewards don't protect against price declines. Only stake coins you'd hold regardless of staking rewards.

Four main approaches to staking, each with different tradeoffs between control, technical requirements, and liquidity:

Solo Staking (Run Your Own Validator)

Maximum decentralization and rewards (no middleman fees). Requires 32 ETH for Ethereum, technical skills to maintain server, and responsibility for uptime. Earn full staking rewards minus hardware/electricity costs.

Hardware requirements: decent computer or NUC (Intel NUC12 works well), 2TB SSD, reliable internet with 10+ Mbps upload. Uptime matters - going offline too long reduces rewards and can trigger penalties.

Best for: Tech-savvy holders with 32+ ETH who want maximum control and returns.

Staking Pools (Delegate to Validator)

Pool your coins with others to meet minimum requirements. Professional validators run infrastructure. You earn rewards minus pool fees (typically 10-25%). No technical knowledge needed.

Popular pools: Lido (4.5 million ETH staked, 10% fee), Rocket Pool (more decentralized, variable fees), Stakewise, Frax. Research pool reputation - they control your coins and can theoretically be slashed.

Best for: Holders with any amount who want decent returns without technical work.

Exchange Staking (Easiest But Centralized)

Keep coins on Coinbase, Binance, or Kraken. Click "Stake" button. Exchange handles everything. Convenience comes at cost: lower returns (exchanges take bigger cut) and you don't control keys.

Coinbase offers 3.0% on ETH (vs 3.8% elsewhere). Binance offers 2.9%. Both take ~25% of rewards as fee. Risk: exchange gets hacked, goes bankrupt, or gets regulated - your staked coins are stuck.

Best for: Complete beginners staking small amounts ($500-$5k) prioritizing convenience.

Liquid Staking (Stake While Keeping Liquidity)

Stake ETH and receive liquid staking token (stETH from Lido, rETH from Rocket Pool) representing your stake. Use this token in DeFi (lend it, provide liquidity, use as collateral) while still earning staking rewards.

Liquid staking tokens usually trade 1:1 with underlying asset but can depeg during market stress. In May 2022, stETH traded at 0.93 ETH causing liquidations. Risks are complex - study thoroughly before using.

Best for: Experienced DeFi users who understand smart contract risks and want capital efficiency.

APY vs APR Explained

APR (Annual Percentage Rate): Simple interest without compounding. Stake 100 ETH at 4% APR, earn 4 ETH per year = 104 ETH total.

APY (Annual Percentage Yield): Includes compounding. If rewards compound daily, 4% APR becomes 4.08% APY. Most staking uses APY since rewards accumulate automatically.

Marketing often inflates numbers using APY when APR is more honest. Always check which metric is advertised. 10% APY sounds better than 9.52% APR but they're equivalent with monthly compounding.

What Determines Reward Rate

Network Activity: More transactions = higher fees = more rewards distributed. Ethereum rewards spiked to 7% APY during NFT mania in 2021, dropped to 3% during bear market lulls.

Total Staked Amount: More validators = rewards split among more people = lower yield per validator. As Ethereum staking participation grows, individual rewards decrease slightly.

Protocol Inflation: Networks mint new coins as rewards. This inflates supply, potentially reducing coin value. Check "real yield" (nominal yield minus inflation rate) for accurate return picture.

Realistic Return Expectations

Solo Ethereum staking: 3.8-4.1% APY after electricity costs. Pooled Ethereum staking: 3.2-3.6% APY after fees. Cardano: 2.8-3.2%. Solana: 6-7%. Polkadot: 11-13%. Cosmos: 14-17%.

These are nominal returns in coin terms. If staked coin price drops 30%, your dollar value decreased despite earning staking rewards. Staking doesn't hedge against price volatility - it adds modest yield on top of price movements.

Lock-Up Periods

Some networks lock staked coins for days or weeks. Polkadot: 28 days. Cosmos: 21 days. Can't sell during crashes. Ethereum removed lock-ups in 2023 but withdrawal queues can delay access during high demand.

Slashing (Validator Penalties)

Validators who double-sign blocks, stay offline excessively, or act maliciously get slashed (lose portion of stake). Delegators share this penalty. Choose reputable validators with 99%+ uptime and strong security practices.

Slashing is rare on Ethereum (0.003% of validators slashed since 2022) but common on Cosmos-based chains. Diversify across multiple validators to reduce risk of single validator mistake costing you.

Smart Contract Risk (Liquid Staking)

Liquid staking protocols use smart contracts. Bugs can freeze funds or enable exploits. Lido and Rocket Pool are audited extensively but smart contracts always carry some risk.

Opportunity Cost

4% staking yield looks weak when crypto market pumps 100%. Staked coins may miss better opportunities (new token launches, trading opportunities, DeFi yields). Weigh staking rewards against other uses of capital.

Centralization Risk

Lido controls 29% of staked ETH. If one entity controls >33%, they can influence network decisions. Choose smaller validators and decentralized pools to support network health.

General process for most staking methods. Specifics vary by network and approach:

Research and Choose Network

Stake coins you already own or plan to hold long-term. Don't buy unfamiliar coins just for high yields. Check network reputation, security track record, community size. Ethereum, Cardano, and Solana are battle-tested.

Read network documentation. Understand lock-up periods, slashing conditions, minimum requirements. Some networks require technical setup (Ethereum solo). Others are click-and-stake simple (Cardano).

Select Staking Method

Exchange staking: Easiest. Click stake on Coinbase/Binance. Lower returns, centralization risk.

Pool staking: Balance of ease and decentralization. Use Lido, Rocket Pool, or native wallet. Better returns than exchanges.

Solo staking: Maximum control and returns. Requires 32 ETH (or equivalent) plus technical skills. Not for beginners.

Choose Validator (If Delegating)

Check validator uptime (should be 99%+). Lower uptime = missed rewards. Check commission rates (5-10% is typical, 20%+ is excessive). Avoid validators at capacity (reduces decentralization).

Use block explorers (Beaconcha.in for Ethereum, Cardanoscan for Cardano) to research validators. Look for established operators with good reputation and consistent performance. Avoid brand-new validators with no track record.

Diversify across 2-3 validators if possible. This protects against single validator downtime or mistakes.

Transfer Coins to Staking Wallet

If exchange staking, skip this step. For pools or solo, transfer coins to compatible wallet (MetaMask for Ethereum, Daedalus/Yoroi for Cardano, Phantom for Solana).

Always send test transaction first ($10-20). Verify it arrives correctly. Then transfer full amount. Crypto transfers are irreversible - wrong address = permanent loss.

Execute Staking Transaction

Follow wallet or exchange instructions to stake. Usually involves clicking "Stake," selecting amount, confirming transaction. Pay network fee (gas) to submit transaction. On Ethereum, gas fees are $2-20 depending on congestion.

Transaction confirms in seconds to minutes. Your stake is now active but rewards don't start immediately. Most networks have activation delay (Ethereum: 24+ hours, Cardano: 15-20 days).

Monitor and Collect Rewards

Rewards accrue automatically. Most staking auto-compounds (rewards are automatically restaked). Check wallet or exchange to see accumulated rewards.

Monitor validator performance quarterly. If uptime drops or they miss duties, consider switching validators. Some networks let you switch validators without unstaking (Cardano). Others require unstake and restake (Ethereum pools).

Track rewards for tax purposes. Each reward is taxable income in most countries. Use crypto tax software (Koinly, CoinTracker) to automate reporting.

Unstaking When Needed

Initiate unstake through wallet or exchange. Respect lock-up periods if applicable. Ethereum: instant to few days depending on queue. Polkadot: 28 days. Cosmos: 21 days. Cannot cancel unstaking once initiated.

Rewards stop accruing when unstake begins. If you change mind after unstaking, you'll need to stake again from scratch. Plan unstaking timing carefully - don't unstake during market pumps when you want exposure.

The 70/30 Rule

Stake 70% of your long-term holdings. Keep 30% unstaked and liquid. This gives you flexibility to sell during pumps, buy dips, or respond to opportunities without waiting through unstaking periods.

Compound Aggressively

Most staking auto-compounds but some require manual claiming and restaking. Do this monthly minimum. Compounding 4% APY for 10 years = 48% total return. With monthly compounding, same 4% becomes 49% return.

Diversify Across Networks

Don't stake everything on one network. Split between Ethereum (safety), Cardano (simplicity), and perhaps one higher-yield network (Polkadot, Cosmos). This hedges against network-specific issues.

Think Long-Term

Staking works best over years, not months. 4% annually feels small but compounds to 48% over decade. Unstaking to chase 20% DeFi yields often backfires. Slow and steady beats greedy and reckless.

Review Quarterly

Check validator performance, reward rates, and network changes every 3 months. Networks upgrade, reward rates fluctuate, validators change commission. Stay informed to maximize returns and minimize risks.

Start with Staking Explained for fundamentals. Move to Ethereum Staking if you hold ETH. Learn Choosing Validators before delegating. Study reward calculations and liquid staking when ready: