What Is Crypto Staking? How It Works

Crypto staking is locking up a proof-of-stake coin to help run and secure its blockchain, and earning rewards for doing so. The reward comes from the network's own coin issuance and is paid in that coin. Staking is only possible on proof-of-stake networks like Ethereum, Solana, and Cardano — Bitcoin cannot be staked. This is educational only, not financial advice.

Staking is one specific way to earn a return: securing a proof-of-stake network. Yield is the broader term for any return on crypto, including staking, lending, and providing liquidity in DeFi. All staking is yield, but not all yield is staking. Non-staking yield strategies usually carry more risk because they layer extra protocols on top.

Staking crypto carries real risks and is not fully safe. The biggest is the coin's price falling while your funds are locked. Others include slashing, lockups, smart-contract bugs, and exchange failure. Lower-risk staking means using an established coin in your own custody; higher-risk means stacking DeFi protocols. Read our risk guide before staking, and never stake money you cannot afford to lose.

Yes, in the US staking rewards are taxed as ordinary income at their fair market value when you gain dominion and control over them, per IRS Rev. Rul. 2023-14. You then owe capital gains tax on any price change when you later sell. Staking creates a tax bill even if you never sell. See our staking taxes guide, and consult a tax professional for your situation.

Staking rewards vary by network and change over time. As of 2026, Ethereum staking pays roughly 3% to 4% and Solana roughly 6% to 7%, but these are variable rates paid in the staked coin. Exchanges reduce your net yield by taking a commission, often 25% to 35% of rewards. A higher advertised yield usually signals higher risk.

You can stake proof-of-stake coins, including Ethereum, Solana, Cardano, Polkadot, and many others. You cannot stake Bitcoin, because it uses proof-of-work, not proof-of-stake. Each network sets its own reward rate, lockup, and rules. Always confirm a coin actually uses proof-of-stake before looking for a place to stake it.

Neither is strictly safer — they trade one risk for another. Exchange staking removes the technical work but hands your keys to a custodian, so an exchange failure or freeze can lock or lose your stake. Native staking in your own wallet keeps you in custody the whole time, but you take on the operational risk of running or delegating to a validator correctly, plus network-level slashing if a validator misbehaves. Pick based on which risk you're more willing to manage, not on which sounds easier.

It depends on what you're comparing it to. Staking rewards are not guaranteed — they're a variable network rate (roughly 3–4% for Ethereum, 6–7% for Solana as of 2026), paid in the staked coin itself, and exchanges typically take a 25–35% commission out of that before it reaches you. If the coin's price falls more than your reward rate over the period you're locked in, staking loses you money in dollar terms even though your coin balance grew — the yield is real, but it's not insulated from price risk the way a bank APY is. Staking is generally worth it if you already planned to hold the coin long-term regardless of price, since the reward is close to free extra coin on a position you weren't selling anyway; it's a weaker case if you're staking specifically to chase yield on a coin you'd otherwise not hold, or if you can't tolerate the lockup/unbonding period. Weigh the reward rate, tax bill (staking income is taxed at receipt per IRS Rev. Rul. 2023-14, before you've sold anything), and lockup terms against your own holding plans before deciding.

The minimum to start staking varies enormously by method: a solo native Ethereum validator needs exactly 32 ETH, but that's the exception, not how most people start. Exchange staking and liquid staking (such as Lido) typically have a much lower minimum — often just a fraction of a coin, and sometimes none at all — while native delegation on networks like Solana or Cardano also has no minimum. Always confirm the current minimum on the specific platform's own page, since it varies by platform and can change.

The right platform depends on what you're optimizing for: ease of use, yield, or keeping custody of your coins. A regulated exchange like Coinbase or Kraken is the simplest choice for most beginners; liquid staking (Lido) adds flexibility at the cost of some smart-contract risk; native delegation keeps you in full custody. See our full platform comparison guide for APY, lockup, and fee details side by side.

Staking secures a proof-of-stake network by locking up the coin itself, while mining secures a proof-of-work network like Bitcoin using specialized hardware and electricity. Staking needs no special hardware and can be started with coins you already hold; mining needs capital in equipment plus a cheap, reliable power supply. See our full staking vs. mining comparison for the cost and risk tradeoffs between the two.

Yes, staking can cost you money, most commonly because the coin's price falls while your funds are locked and the reward is too small to offset the drop. Slashing, lockup timing, smart-contract bugs, and exchange failure can all add to that risk. See our full guide on every way you can lose money staking before you commit funds.

A staking pool lets many smaller holders combine their coins to meet a network's minimum stake requirement, then splits the resulting rewards pro-rata based on how much each person contributed. This matters most on networks with a high solo-staking minimum — like Ethereum's 32 ETH — where pooling is how most everyday holders participate at all. The pool operator (an exchange, a liquid-staking protocol, or a dedicated pool) runs the actual validator infrastructure and typically takes a commission out of the rewards before distributing the rest.

Custodial staking means a third party — usually an exchange — holds your private keys and stakes on your behalf; you get simplicity, but you're trusting that platform not to freeze, lose, or mismanage your funds. Non-custodial staking means you keep your own keys the whole time, either by running or delegating to a validator directly, or through a liquid-staking protocol that issues you a token representing your staked position while you retain control of that token. Non-custodial approaches remove the counterparty risk of an exchange but add the operational responsibility of managing your own keys and delegation correctly.