Staking is a popular way to earn passive income with your crypto investments. Here’s how you can start.
Staking offers crypto holders a way to put their digital assets to work and earn passive income without needing to sell them. Think of staking as the crypto equivalent of depositing money in a high-yield savings account. When you stake your assets, you lock up coins to help run the blockchain and maintain its security. In return, you earn rewards—typically much higher than traditional bank interest rates.
How Does Staking Work?
Staking is exclusive to blockchains using the proof-of-stake (PoS) consensus mechanism. Validators (or "stakers") lock up tokens as collateral to participate in verifying transactions. This stake acts as their "skin in the game," discouraging malicious activity—if the network is compromised, their tokens lose value. Validators earn rewards proportional to their stake.
Key points:
- Validators can operate solo or pool funds from delegators.
- Penalties ("slashing") apply for downtime or misconduct.
- Minimum stakes vary (e.g., Ethereum requires 32 ETH).
👉 Learn more about proof-of-stake
Cryptocurrencies You Can Stake
Staking is limited to PoS-based blockchains. Popular options include:
- Ethereum (ETH)
- Cardano (ADA)
- Solana (SOL)
- Avalanche (AVAX)
- Polkadot (DOT)
How to Start Staking
- Buy stakable assets on exchanges like Coinbase or Binance.
- Transfer coins to a staking-enabled wallet or platform.
- Delegate to a pool (for smaller holdings) or run your own validator node (advanced).
Top staking platforms:
- EverStake
- BlockDaemon
- Figment
Risks of Staking
- Price volatility: Rewards may not offset asset depreciation.
- Lock-up periods: Some coins restrict withdrawals.
- Validator penalties: Poor performance reduces rewards.
- Hacking: Staked funds are uninsured.
Profitability
Average staking yields exceed 11% APR, but fees and pool performance impact returns. Maximize profits by:
- Choosing low-fee pools.
- Researching validator track records.
👉 Maximize your staking rewards
FAQ
Q: Can I unstake coins anytime?
A: It depends on the blockchain—some impose waiting periods.
Q: Is staking safer than trading?
A: It’s less speculative but still carries risks like slashing or hacks.
Q: Do I need technical skills to stake?
A: No—delegating to pools requires minimal effort. Running a validator node is complex.
Q: How are staking rewards taxed?
A: Rewards are typically taxable as income; consult local regulations.
Q: Can I stake Bitcoin?
A: No—Bitcoin uses proof-of-work, though some platforms offer synthetic staking.
Q: What’s the minimum stake?
A: Varies by blockchain (e.g., 32 ETH for Ethereum). Pools lower barriers.
Staking is ideal for long-term holders seeking passive income. Always DYOR (do your own research) before committing funds.