Cryptocurrency staking: what a beginner investor should know

As blockchain technology has evolved, networks have begun transitioning from the outdated Proof-of-Work (PoW) consensus mechanism to the more environmentally friendly and energy-efficient Proof-of-Stake (PoS).

Replacing mining in PoW networks, PoS blockchains introduced a new mechanism for rewarding network participants — staking.

What is Staking?

Staking is a way of earning income in cryptocurrency, where a user locks their digital assets for a specific period, depending on the chosen blockchain network.

In some sense, staking is very similar to bank deposits. However, unlike deposits, in staking, users retain control over their assets, which are not transferred to third parties.

There are two types of staking:

• Direct staking in the blockchain. This method is available only to validators who ensure network security and participate in block production. Validators must meet specific requirements, including a minimum staking amount. In some networks, such as the Cosmos Network, they are selected solely through a voting process.
• Delegation. This staking method is available to all users and does not require specialized knowledge or significant investments. The idea is that the cryptocurrency holder delegates their tokens to a validator, thereby strengthening its role and influence in the network. In return, for participating in maintaining the blockchain, the delegator receives a share of the reward paid to the validator. There are no requirements for delegators, and the minimum entry threshold is very low.

The cryptocurrency market shows a steady increase in demand for staking, indicating investor confidence in the long-term prospects of digital assets.

For example, according to Dune Analytics, in July 2025, the number of staked Ethereum tokens exceeded a record 36,000 ETH, and over just two years, this figure grew by 1.5 times. A growing trend toward staking is also observed in other networks, such as Solana and Binance Smart Chain (BSC).

Pros and cons of staking

Advantages of staking:

• Security. Unlike PoW-based networks, which are vulnerable to 51% attacks and double-spending, in PoS blockchains, node operators must lock up their own funds, making attacks economically unfeasible. The more tokens are locked in staking, the more resistant the network becomes to attacks.
• Passivity. Staking works on a "set it and forget it" principle.
• Simplicity. Staking is much easier compared to mining, which requires specialized equipment setup and maintenance, and is only slightly more complex than bank deposits.
• Profit increases in the case of cryptocurrency price growth.
• Accessibility. Staking has a low entry threshold (less than $100). In many networks, you can stake as little as one token or even less. For example, entering the mining industry requires a capital investment of at least $ 1,000, not to mention electricity costs.
• Hedging opportunities. Even if the cryptocurrency price drops, the investor continues to receive staking rewards, thereby offsetting some potential losses and reducing overall risk.

Disadvantages of staking:

• Lock-up period (unstaking period). Depending on the blockchain, the lock-up period can range from three days to two weeks. This means that a user cannot withdraw and sell tokens at any time, for example, during a market crash. In such cases, the delegator risks losses but cannot do anything until the tokens are unlocked (unless they have hedged their position). In some networks, such as Cardano, a flexible (configurable) lock-up period exists, but staking rewards are usually lower.
• Risk of losing rewards if the validator goes offline or acts maliciously. Therefore, it is recommended to choose large validators with uptime* close to 100%. If the wrong validator is selected, users can redelegate their stake to another node without waiting for the unstaking period to end.
• Smart contract vulnerabilities and network failures. These could theoretically lead to cryptocurrency losses. However, such incidents have not occurred with major, popular networks so far.

* Uptime — the continuous operational time of a validator in the network.

In which blockchains can you stake cryptocurrency?

Staking is available in networks that operate based on the PoS consensus mechanism or similar ones (DPoS, BFT, etc.). Here is a list of the largest staking-supported networks:

1. Ethereum,
2. Solana,
3. BNB Chain,
4. Sui,
5. Hyperliquid,
6. Cardano,
7. Tron,
8. Bitcoin (through restaking protocols, Babylon, and Lombard Finance),
9. Avalanche,
10. Story.

How staking works: how to stake cryptocurrency?

Before staking digital assets, a user must create and fund a wallet with the required cryptocurrency, depending on the chosen network. For example: ETH in Ethereum, SOL in Solana, SUI in Sui, and ADA in Cardano.

Once the cryptocurrency has been deposited into the wallet, the user can stake it. To do this, they must choose a validator and then delegate their share to it by following the instructions.

Many popular wallets support staking directly through their interface, such as:

• Ledger,
• Trezor Safe 5,
• Keystone,
• Trust Wallet.

You can also stake cryptocurrency using special platforms provided by major validators. Examples include Everstake, QuickNode, and Citadel. In this case, any wallet compatible with the specific network can be used, even if it does not support staking directly.

Centralized platforms and exchanges such as Binance, Coinbase, Kraken, OKX, Huobi, Nexo, and Stakely also support staking. Their main disadvantage is that staking yields on centralized platforms are lower than those achieved by delegating directly on the blockchain. However, such platforms have their advantages, such as the possibility of loss compensation in the event of a network failure or hack.

The process of withdrawing assets from staking is also straightforward — simply log in to the platform or wallet, locate the desired position, and click the 'Unstake' button. From that moment, the lock-up period begins, after which the funds will again be available in the wallet.