If you hold cryptocurrency and aren’t staking it, you might be leaving money on the table. Staking lets you earn rewards on coins you already own by helping secure a blockchain network. The yields can be attractive, but they come with real risks that are easy to overlook.
This guide covers how crypto staking works, which tokens you can stake, what to do with your earnings, and whether staking is worth it for you.
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In simple terms, staking means locking up your cryptocurrency to help secure a blockchain network.
In exchange, you earn rewards, usually paid out in the same coin you staked. Think of it like earning interest on a savings account. But instead of a bank using your deposit to make loans, the network is using your coins to validate transactions and keep everything running smoothly. Staking also helps protect the network from bad actors, since validators risk losing their staked coins if they behave dishonestly.
Not every cryptocurrency works this way, though. The two main systems blockchains use to validate transactions (also called “consensus mechanisms”) are proof-of-work (PoW) and proof-of-stake (PoS). Only PoS cryptocurrencies can be staked.
Bitcoin, for example, runs on proof-of-work. You cannot stake bitcoin. Instead, “miners” compete to solve complex mathematical puzzles using powerful computers. The winner gets to add the next block of transactions to the chain and receive newly minted coins as a reward. It’s effective, but it requires a massive amount of energy and specialized hardware.
Proof-of-stake takes a different approach in which the network automatically selects validators based on how many coins they’ve committed (or “staked”) as collateral. Validators are chosen to confirm transactions and add new blocks, and they earn rewards in the form of new tokens for doing so.
To recap: Crypto staking is a byproduct of the proof-of-stake consensus mechanism. Securing a proof-of-stake network involves locking up tokens to become a validator. Validators earn rewards in the form of new tokens based on the number of tokens staked.
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Networks that use a proof-of-stake (PoS) consensus mechanism select validators to confirm new blocks of transactions based on the number of coins they’ve staked. The more you stake, the more likely you are to be chosen as a validator, and the more rewards you can earn.
Think of it as a weighted lottery run by software: The more coins you stake, the better your odds of being selected. The logic is that someone with a large financial stake in the network has a strong incentive to verify transactions honestly, since they’d lose their own money if they didn’t. Validators are chosen to confirm transactions and add new blocks, and they earn rewards in the form of new tokens for doing so.
You don’t necessarily need to run your own validator node to participate, either. Most exchanges offer staking services that let you stake your coins and earn a share of the rewards without any technical setup. All you have to do is buy or deposit the token you want to stake and click a button to start staking.
The trade-off is that your coins are typically locked up for a period of time, meaning you can’t sell or move them until the lockout period is over. The exact amount of time staked tokens are locked up varies by network. Some blockchains have a set unstaking period built into the protocol. Polkadot’s is 28 days, Cosmos’s is 21 days, and Ethereum’s can vary depending on how many people are trying to exit.
If you’re staking through an exchange, the platform may impose its own terms on top of that, sometimes offering flexible staking with no lockup in exchange for a lower yield.
For long-term holders, lock-up periods are usually not an issue. For those who may need access to their funds in the near term, it’s something to keep in mind.
That’s because staking exposes the coin holder to what’s known as opportunity risk. While your coins are locked up, you can’t sell them or move them into a different investment. If the token’s price spikes and then crashes before your lockup period ends, you’ve missed the chance to take profits. Or if a better opportunity comes along, your funds are tied up and vulnerable.
Ethereum is probably the most well-known example of a PoS blockchain, having transitioned from proof-of-work to proof-of-stake in 2022. But it’s far from the only one. Solana, Cardano, and a number of other networks all use some form of staking.
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Any cryptocurrency that runs on a proof-of-stake blockchain can be staked. That includes some of the largest and most widely traded tokens in the market. Here are a few of the most popular options:
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Ethereum (ETH-USD): This is the biggest name in proof-of-stake. Running your own validator requires 32 ethereum (~$64,000), but most major exchanges let you stake smaller amounts through pooled staking services.
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Solana (SOL-USD): Known for fast transaction speeds and low fees. Staking is straightforward on most platforms, and solana has become one of the more popular staking options among retail investors.
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Cardano (ADA-USD): A research-driven blockchain with a loyal community. Cardano’s staking process is flexible, with no mandatory lockup period on most platforms.
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Polkadot (DOT-USD): Offers some of the higher staking yields among large-cap tokens, though it comes with a longer unlocking period.
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Cosmos (ATOM-USD): This is one of the highest-yielding stakeable tokens, with APYs that can reach 18% or more.
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Avalanche (AVAX-USD): A fast-growing network with competitive staking rewards and relatively short lockup periods.
This isn’t an exhaustive list. There are over 100 different PoS cryptocurrencies that can be staked.
In general, tokens with smaller market caps exhibit higher volatility in both price and yield.
Once you start earning staking rewards, you have a few paths forward. What makes sense depends on your financial goals and how you feel about the token’s long-term prospects.
The simplest option is to let your rewards compound. Most staking platforms will automatically add your earned tokens back into your staked balance, which increases the amount you’re earning rewards over time.
It’s the same basic principle as compounding interest. If you’re bullish on the token and plan to hold it for the medium to long term, this can be an efficient way to grow your position without putting in additional capital.
If you’d rather take profits along the way, you can withdraw your rewards and convert them to dollars or a stablecoin. This locks in the value of what you’ve earned and reduces your exposure to price swings. Some investors treat staking rewards like dividends from a stock, periodically cashing them out while keeping the original position intact.
A third option is to reinvest your rewards into a different token. This can be a way to diversify your holdings over time, especially if you’re staking a higher-risk asset and want to move some of your earnings into something more established.
One thing to keep in mind, regardless of what you do: Crypto staking rewards are generally considered taxable income by the IRS. That means you may owe taxes on the fair market value of the tokens at the time you receive them, even if you don’t sell. Keeping records of your rewards and their value at the time of receipt can save you headaches when tax season rolls around.
Learn more: Yes, crypto is taxed. Here’s when you have to pay.
Staking pays out rewards (in tokens) as a percentage of the tokens staked. So the more tokens you stake, the higher the potential rewards.
Staking can provide generous yields, up to 18.5% as of April 2026. But this yield comes with great risk.
Cryptocurrencies tend to be very volatile. And crypto staking rewards are denominated in the native token of the network — not U.S. dollars. That means that although you might be able to earn 18% APY, the token’s value could drop 40% in a month or two. The value of any returns you make (in dollar terms) is then undermined.
Let’s look at Polkadot (DOT) as an example. DOT is the 43rd largest cryptocurrency by market cap and offers a yield of around 11.5%.
In early April 2025, DOT was trading at $4.00. By April 2026, the price fell to $1.25. That’s a decline of almost 70% in one year.
If an investor had staked 100 DOT tokens worth $400 in 2025, they would have earned 11.5 DOT one year later.
They might have expected to receive $46 worth of DOT after one year. But because DOT fell by 70% in U.S. dollar terms, their rewards shrank to less than $14. The initial outlay of staked coins would also be worth 70% less.
The bottom line is that while crypto staking can offer attractive yields, the actual returns might not amount to what users expect due to fluctuations in the token’s price.
The answer depends on your goals, risk tolerance, and time preference. For an investor who already holds some proof-of-stake cryptocurrency, staking can provide a way to earn income on idle holdings.
For someone looking for a low-risk, stable yield-bearing investment, crypto staking is almost certainly not worth it. US Treasury bills, certificate of deposit (CD) accounts, or a high-yield savings account might be better options for those with a lower risk tolerance.
Comparing crypto staking to a savings account can help clarify the difference in risk. A high-yield savings account might offer an APY of 4% to 5%, and that rate is backed by an FDIC-insured institution. Your funds will remain in the account, earning interest and backed by federal insurance.
With crypto staking, yields can look much more attractive on paper, but your principal is denominated in a volatile token. A 10% staking yield doesn’t mean much if the underlying asset drops 30% in a quarter, as explained earlier. Staking vs. a savings account isn’t an apples-to-apples comparison, even though the mechanics sound similar.
That said, staking does have a place for an investor who believes in the long-term value of a proof-of-stake token and plans to hold it through the ups and downs. If that describes your approach, staking lets you accumulate more of that token over time at no additional cost.
The key is being honest with yourself about whether you’re genuinely a long-term holder or whether you’re drawn to the yield and underestimating the risk that comes with it.
Deciding which cryptocurrency is best to stake depends on your goals and risk tolerance. If you’re looking for yield, ATOM could be an attractive option with its 18.5% APY. Investors looking to minimize risk might prefer ETH because it has a larger market cap and somewhat less volatility.
No. Bitcoin uses a proof-of-work consensus mechanism, which relies on miners rather than stakers to validate transactions. Only cryptocurrencies that run on proof-of-stake networks can be staked.
As of April 2026, Cosmos (ATOM) offers one of the highest yields among major PoS tokens, with APYs around 18.5%. Other tokens may offer even higher rates, but they often come with smaller market caps and greater volatility.
Most major exchanges, such as Coinbase, Kraken, and Binance, offer ethereum staking with step-by-step instructions built into their platforms. The process is usually as simple as selecting ETH, choosing a staking option, and confirming the amount.
Running your own validator is more involved and requires 32 ETH, as well as some technical knowledge. Ethereum’s official documentation at Ethereum.org is a good starting point for those who want to go that route.