Staking
Also called: crypto staking · stake
Definition
Staking is locking up coins of a proof-of-stake blockchain to help validate transactions and secure the network, in return for staking rewards paid in that coin.
This entry is shown in English.
How Staking works
In proof-of-stake networks such as Ethereum, Solana and Cardano, validators put coins at stake as a guarantee of honest behaviour. They earn rewards from new issuance and transaction fees. If a validator misbehaves or goes offline, some networks cut part of its stake, which is called slashing.
You can stake in several ways: run your own validator, delegate to a validator, use a liquid staking protocol that gives you a token like stETH, or use an exchange staking product where the platform runs the validators. Each route has different lock-up periods, fees and custody risk.
Rewards are paid in the staked coin, so your value in dollars still depends on its price. Unstaking can take days or longer depending on the network, which matters if you might need to sell quickly.
Example
Suppose you stake 10 SOL through a validator with an illustrative 7 percent annual reward and a 5 percent validator commission. Gross rewards for a year would be 0.7 SOL, the validator keeps 0.035 SOL, and you receive about 0.665 SOL. If SOL's price drops 30 percent during that year, your 10.665 SOL can still be worth less in dollars than the original 10 SOL was.
Common mistakes
- Counting staking rewards in coin terms only and forgetting the coin's price can fall.
- Ignoring the unbonding or unstaking period before you need the funds.
- Staking through an unknown site that asks you to send coins instead of delegating from your own wallet.
Learn and practise
Try it on an exchange
OKX offers this. Sign up through our link and the code below is applied.
nexu888Open OKXFAQ
Is staking crypto safe?
Native staking is generally lower-risk than many DeFi strategies, but you still face price risk, possible slashing and, with exchanges or protocols, platform risk.
Can I lose my staked coins?
You can lose some through slashing, smart contract failures or a platform failing, and their value can fall with the market.
Are staking rewards taxed?
In many countries they are, but rules differ on when and how. Check the tax rules where you live.