What is crypto staking? How it works, rewards and risks

Crypto staking means locking up the coins of a proof-of-stake blockchain so they help secure the network, and earning rewards for it. It is the proof-of-stake equivalent of mining: instead of spending electricity, participants put their own coins at risk as collateral for honest behaviour.

Staking is often marketed as "earning interest on crypto", but it is not a savings account. This explainer covers how staking works, the main ways to do it, what rewards look like in practice, the risks, and how to start more safely. It is educational, not investment advice.

How staking works

Networks such as Ethereum, Solana, Cardano, Polkadot and Tezos use proof of stake. Their blocks are produced and checked by validators — computers run by people or companies that have locked up the network's coin.

1. A validator stakes coins, either its own or coins delegated to it by holders.
2. The protocol picks validators to propose new blocks and to vote (attest) that other blocks are valid.
3. Validators that do this correctly earn rewards, mostly newly issued coins plus a share of transaction fees.
4. Validators that break the rules — for example, signing two conflicting blocks — can be slashed, losing part of their stake. Validators that are simply offline usually miss rewards or pay small penalties.

The stake is what makes cheating expensive: an attacker would need to control a large share of all staked coins and would risk losing them.

Where staking rewards come from

Rewards are paid in the same coin you stake, and most of them come from new issuance rather than from users' fees. According to Bitwise's Q3 2026 report, more than 96% of Ethereum staking rewards came from new issuance, and the average ETH staking yield was 2.63%, down from 2.81% a quarter earlier, as record amounts of ETH and SOL were staked. When more coins are staked, the same rewards are split across more holders, so yields tend to fall.

That has two consequences. First, a yield of a few percent can easily be wiped out if the coin's price drops. Second, holders who do not stake see their share of the total supply slowly diluted.

Ways to stake

Solo staking. On Ethereum you need 32 ETH to run your own validator, plus a reliable computer, a stable connection and careful key management. Since the Pectra upgrade in May 2025, a single validator can hold up to 2,048 ETH, but the 32 ETH minimum still applies. Solo staking gives the most control and supports decentralisation, but mistakes are yours to pay for.

Exchange staking. Large exchanges let you stake with a few clicks and often with tiny amounts. The exchange runs the validators and takes a cut of rewards. You are trusting it with your coins, the same trade-off described in our guide to custodial vs non-custodial wallets.

Delegation. On networks such as Solana, Cardano, Polkadot and Tezos you can delegate your stake to a validator from your own wallet. The validator charges a commission; your coins stay in your wallet, though on some networks they are locked while staked.

Liquid staking. Protocols such as Lido (stETH) and Rocket Pool (rETH) stake your ETH and give you a token that represents it and grows in value or balance with rewards. You can trade that token or use it in DeFi, but you add smart-contract risk, and in stressed markets it can trade below the value of the underlying ETH. Our guide on how to store Ethereum explains how to keep these tokens safe.

Lock-ups and unstaking

How quickly you can get your coins back depends on the network and method:

• Ethereum: withdrawals have been possible since the Shapella upgrade in April 2023, but validators leave through an exit queue that can take days or longer when many people exit at once.
• Solana: stake activates and deactivates at epoch boundaries, roughly every two days.
• Cardano: there is no lock-up; delegated ADA stays spendable in your wallet.
• Liquid staking tokens can usually be sold right away on the market, though the price may be below the redemption value.

Benefits and risks

Taxes and rules

In many countries staking rewards are taxable. In the US, the IRS says rewards count as income when you gain control of them (Revenue Ruling 2023-14), and selling later may trigger capital gains. Regulators are still deciding how to treat staking services: the Cardano Foundation, for example, has urged the EU to regulate DeFi and staking by function, not technology in the MiCA review. Keep records of every reward and check local rules.

How to start staking more safely

• Learn the network first. Read how its staking, lock-ups and penalties work — our explainer on what Ethereum is is a good starting point for ETH.
• Start small and see how rewards and unstaking work before committing more.
• Choose providers carefully: check fees, track record, how many validators they run and whether they publish audits.
• Keep control where you can: delegation from your own wallet or a hardware wallet keeps the keys with you.
• Don't chase the highest yield. Unusually high numbers usually mean extra risk.