ONGOING
Learn how crypto staking works, what yields to expect, the risks involved, and how to start staking ETH, SOL, and other assets in 2026.
What is Crypto Staking? Earning Yield by Securing the Network
Staking is the process of locking up cryptocurrency to participate in validating transactions on a Proof of Stake blockchain, and earning rewards in return. It is how Ethereum, Solana, Cardano, and dozens of other blockchains secure their networks.
Instead of miners competing to solve puzzles, Proof of Stake networks select validators based partly on how much cryptocurrency they have staked as collateral. Validators who behave honestly earn staking rewards. Those who attempt to cheat or act negligently risk having a portion of their stake destroyed, a punishment called slashing.
From the staker's perspective, it is similar to earning interest on a savings account, but instead of a bank paying you for depositing money, the blockchain protocol pays you for helping secure the network.
Ways to Stake: Direct Validation, Liquid Staking, and Exchanges
There are several ways to stake, each with different requirements, returns, and tradeoffs.
Direct validation requires running your own validator node. On Ethereum, this requires staking exactly 32 ETH (a significant capital requirement), running server infrastructure continuously, and maintaining good uptime. The rewards are highest here, and you maintain full self-custody, but the technical and capital requirements are substantial.
Liquid staking protocols like Lido and Rocket Pool let you stake any amount of ETH and receive a liquid token (stETH or rETH) representing your staked position. You can use these tokens elsewhere in DeFi while still earning staking rewards. This is the most popular approach for retail participants.
Centralized exchanges like Coinbase and Kraken also offer staking services that handle everything for you, though they take a larger cut of rewards and you trust them with custody.
Staking Yields: What to Realistically Expect
Staking yields vary considerably by blockchain and method.
Ethereum staking currently yields approximately 3 to 4 percent annually in ETH terms, depending on network activity and the number of validators. Solana staking yields around 6 to 8 percent. Other smaller Proof of Stake chains often advertise higher yields, though these must be evaluated carefully as they may reflect token inflation rather than genuine economic returns.
Yields are typically paid in the staked cryptocurrency itself, not in dollars. This matters because if the underlying asset falls in value, your dollar-denominated returns may be negative even while your token count grows. High staking yields often accompany high token inflation, meaning your percentage of the total supply may not be growing as fast as the headline APY suggests.
Always look at the real yield (above inflation) rather than just the nominal yield.
Staking Risks: Lockups, Slashing, and Smart Contract Vulnerabilities
Staking involves several risks that are worth understanding before committing funds.
Lockup periods mean your staked assets may not be immediately accessible. Ethereum unstaking, for example, involves a queue that can take days to weeks during periods of high exit demand. If you need liquidity urgently, staked assets may not be available. Liquid staking tokens like stETH trade on secondary markets, providing liquidity, but at times they can trade at a discount to the underlying ETH.
Slashing risk is real for those running their own validators. Configuration errors or downtime can result in penalties. Liquid staking protocols mitigate this by distributing stake across many validators.
For liquid staking and exchange staking, smart contract risk and platform risk respectively apply. A bug in Lido's contracts or a collapse of an exchange could result in loss of staked assets.
Staking vs. Other Ways to Earn Yield in Crypto
Staking is one of several ways to earn yield on cryptocurrency holdings, and it is worth comparing them.
Staking rewards come from protocol inflation and transaction fees, making them relatively predictable and backed by the network itself. DeFi lending on platforms like Aave involves lending your assets to borrowers and earning variable interest. The yields can be higher but carry smart contract risk. Liquidity provision on DEXs earns trading fees but exposes you to impermanent loss.
Among yield-generating activities in crypto, staking on established Proof of Stake networks is generally considered one of the lower-risk approaches. The risks are well understood, the protocols are battle-tested, and the rewards are paid in assets with genuine utility.
For most long-term crypto holders, staking the assets they already plan to hold makes straightforward financial sense.
Staking as a Long-Term Crypto Strategy
Staking is one of the most practical and accessible ways for ordinary participants to earn a return on cryptocurrency while contributing to network security.
For long-term holders of assets like ETH or SOL who plan to hold regardless, staking turns idle assets into yield-generating ones at minimal additional risk. Liquid staking protocols have made this accessible to anyone with any amount of ETH, removing the 32 ETH barrier that previously limited direct participation.
Start with well-established protocols and assets, understand the lockup terms before committing, and factor staking rewards into your overall return calculations when evaluating cryptocurrency investments.
This information, including any opinions and analyses, is for educational purposes only and does not constitute financial advice or recommendation. You should always conduct your own research before making any investment decisions and are solely responsible for your actions and investment decisions.
The services of Freedx are not directed at, or intended for use by residents of the United States, Canada, and the United Arab Emirates, nor by any person in any jurisdiction where such use would be contrary to local laws or regulations.
© 2025 Freedx, All Rights Reserved