What Is Staking? A Beginner's Guide

Staking is a way to earn rewards on the cryptocurrency you already own. Instead of letting your tokens sit idle in a wallet, you "lock" them up to help run the network. In return, the network pays you a share of the newly created tokens — similar to how a savings account pays interest.

How Does Staking Work?

Blockchains like Ethereum, Solana, and Cosmos need thousands of computers around the world to agree on which transactions are valid. These computers are called validators. To become a validator, you must deposit — or "stake" — a certain amount of the network's native token.

When you stake your tokens, you are essentially saying: "I promise to play by the rules." If the validator you back behaves honestly, you earn rewards. If it tries to cheat, the network can destroy part of your deposit — a penalty called Slashing.

Do I Need to Run a Computer?

No. Most people stake through a staking provider — a company that runs the technical infrastructure for you. You keep ownership of your tokens, the provider takes a small fee, and you collect the rewards. Think of it like renting out a spare room through a property manager.

How Much Can I Earn?

Staking rewards vary by network and typically range from 3% to 20% per year. The exact rate depends on how many people are staking, how the network distributes rewards, and what fees the provider charges.

Best staking rate right now

16.61%

Across every chain we track. Tap to compare side-by-side.

What Are the Risks?

Price risk: The value of your staked tokens can go down, which may outweigh the rewards you earn.
Lock-up periods: Some networks require you to wait days or weeks to unstake your tokens.
Slashing: If your validator breaks the rules, you could lose a portion of your stake.
Provider risk: If you stake through a provider, you trust them to keep their servers online and secure.

Is Staking the Same as Yield Farming?

Not quite. Staking helps secure a blockchain and is usually considered lower risk. Yield farming involves lending or pooling tokens in DeFi protocols to earn extra returns. It often pays more, but the risks — including smart-contract bugs and sudden losses — are higher. If you want to keep your tokens liquid while still earning, see our guide on liquid staking.

Frequently asked questions

Is staking safe for beginners?

Staking is generally lower-risk than DeFi yield farming, but it is not risk-free. The main risks are token price drops, lock-up periods, slashing if your validator misbehaves, and provider downtime. Start with a small amount on a major chain and a well-known provider.

Do I keep ownership of my tokens when I stake?

Yes. When you stake through a non-custodial setup or a reputable provider, your tokens stay yours — they're just locked while they help secure the network. Custodial staking (e.g. on a centralised exchange) is different: the exchange technically holds the keys.

How much money do I need to start staking?

Through a staking provider you can usually start with any amount — even a few dollars. Running your own validator is more demanding (Ethereum requires 32 ETH, for example), but most newcomers don't need to do that.

Can I lose money staking?

Yes. The token's price can fall further than your rewards make up for, your validator can be slashed for breaking the rules, or a provider can have an outage. The rewards are real but they're not a guaranteed positive return in dollar terms.

How are staking rewards taxed?

In most jurisdictions, staking rewards are taxable income at the time you receive them. Selling the rewards later is a separate capital-gains event. Tax rules vary widely — check the rules where you live or talk to a tax professional.

What Is Staking?