Cryptocurrency staking is a method that allows investors to generate passive income by locking up their digital assets to support the operation and security of a blockchain. Unlike mining, which requires significant computing power, staking is based on a Proof-of-Stake (PoS) mechanism and its variants, making the investment more accessible and less energy-consuming.
In full rise to power, staking is establishing itself as a pillar of the crypto universe, reinforcing the security and decentralization of blockchains, while generating interesting revenues for cryptocurrency holders. With platforms such as Ethereum, Cardano or Solana, staking has become a fundamental pillar of Web3.
In this article, we will explore in detail:
- How staking works and its advantages
- The different methods for staking your cryptocurrencies
- The risks and precautions to take before investing
- The best platforms and cryptos for staking in 2025
- Future trends and prospects for staking
Whether you are a beginner or an experienced staker, this guide will help you understand staking and make informed decisions to maximize your earnings.
1. What is cryptocurrency staking?
Staking allows cryptocurrency holders to lock up their tokens to participate in the security and proper functioning of a blockchain network based on Proof of Stake (PoS) or its variants, in exchange for rewards.
Origin and evolution of staking
Since then, staking has evolved and become widely democratized with major blockchains such as Ethereum 2.0, Cardano (ADA), Solana (SOL) and Polkadot (DOT), all of which are based on improved PoS mechanisms. Today, staking is one of the most popular ways to secure a decentralized network while earning a return on your digital assets.
Difference between staking and mining
Here is a table comparing staking and mining:
| Criteria | Staking (Proof-of-Stake – PoS) | Mining (Proof-of-Work – PoW) |
| Principle | Locking cryptos to validate transactions and secure the network | Solving complex calculations to validate blocks and secure the blockchain |
| Consensus mechanism | Proof-of-Stake (PoS) | Proof-of-Work (PoW) |
| Materials required | No need for special hardware, just a wallet and cryptos | Powerful hardware (ASICs, GPUs) with high energy consumption |
| Energy consumption | Low | Very high |
| Profitability | Passive income from staking rewards | Variable income based on electricity and material costs |
| Risks | Crypto volatility, slashing penalties, blocking funds | High electricity costs, equipment obsolescence |
| Accessibility | Easy, accessible to all with compatible cryptos | Complex, requiring substantial initial investment |
| Examples of blockchains | Ethereum 2.0, Cardano, Solana, Polkadot | Bitcoin, Ethereum (avant ETH 2.0), Litecoin |
💡 Staking is more environmentally friendly and easy to access, as opposed to mining, which requires expensive equipment and high energy consumption.
2. How does staking work?
Staking is based on a consensus mechanism called Proof-of-Stake (PoS), which secures a blockchain while validating transactions. Unlike Proof-of-Work (PoW) used by Bitcoin, PoS does not require intensive computing power, making it more environmentally friendly and accessible to users.
2.1 Principle of Proof-of-Stake (PoS) and its variants
Proof-of-Stake (PoS) is a mechanism in which validators are selected based on the number of tokens they hold and lock in the network. The more tokens a user owns and stakes, the more likely they are to be chosen to validate a block and receive a reward.
Advantages of PoS
- More energy efficient than Proof-of-Work (PoW)
- Lower entry barrier for participation
- Better scalability and transaction speed
The PoS variants
Delegated Proof-of-Stake (DPoS): Delegated Proof-of-Stake
With DPoS, users elect delegates to validate transactions on their behalf. Although it offers speed and scalability, this system can concentrate power among a few players.
Examples of blockchains using DPoS: EOS, TRON, Steem.
Nominated Proof-of-Stake (NPoS): Proof-of-Stake Nominated
Used mainly by Polkadot, NPoS allows token holders to designate trusted validators.
Unlike DPoS, where voting is based on the number of tokens held, NPoS favors a balance between validators to avoid too much concentration of power.
Example: Ouroboros Praos and BABE use NPoS.
Hybrid PoS
Some networks combine PoW and PoS to take advantage of the benefits of both systems. Example: Decred (DCR) uses a hybrid model where miners (PoW) and stackers (PoS) participate in block validation, ensuring increased security and better governance.
2.2 Process technique
Staking follows a well-defined process involving several essential steps:
1. Token locking
Users must lock a certain amount of cryptocurrency in a wallet compatible with the blockchain in question.
This locking serves as a guarantee for the proper validation of transactions.
Example: On Ethereum 2.0, you must deposit 32 ETH to become a validator.
2. Selection of validators
The blockchain randomly selects validators based on the number of tokens involved and other criteria such as seniority or a fairness factor.
On some networks such as Cardano, the Ouroboros algorithm guarantees a fair selection of validators.
3. Validation of transactions and addition of blocks
Once selected, the validator groups the transactions into a block and submits them to the network.
If the block is validated by the other participants, it is added to the blockchain and the validator receives a reward in the form of tokens.
4. Rewards and penalties
Validators earn tokens for participating in the network, and users who entrust their tokens to them also receive a portion of the rewards.
Penalties (Slashing): If a validator acts maliciously (double validation, inactivity, etc.), they may lose some or all of their tokens. This encourages honest behavior and secures the network.
2.3 Example with Ethereum 2.0 and other blockchains
Staking has become a major trend with the gradual abandonment of Proof-of-Work (PoW) in favor of Proof-of-Stake (PoS) on several blockchains, including Ethereum.
Ethereum 2.0: from PoW to PoS
Ethereum originally used Proof-of-Work (PoW), like Bitcoin, but this method was:
- Slow: a limited number of transactions could be processed per second (TPS).
- Energy-intensive: required a high level of computing power.
- Expensive: transaction costs (gas fees) were high.
With Ethereum 2.0 (The Merge, September 2022) , Ethereum has switched to Proof-of-Stake , which has resulted in:
- Reduction in energy consumption (-99.95%)
- Increased scalability
- New income for stackers (ETH staking with an average return of 4 to 6% per year)
Comparison with other blockchains
0
Polygon, as a Layer 2 solution, improves transaction speed and costs while relying on Ethereum’s security. Ethereum remains the benchmark in DeFi and smart contracts. Solana is progressing fast, especially in gaming and fast dApps. Polygon complements the Ethereum ecosystem by making applications more accessible.
💡It is important to note that each blockchain has its strengths and weaknesses, and the choice often depends on the specific needs of the project or the intended application.
3. Why staking?
3.1 Advantages of staking
Staking has several advantages for investors and for the entire blockchain ecosystem:
- Passive income
The main attraction of staking is the possibility of generating passive income . By locking their tokens on a blockchain, investors can receive regular rewards in the form of cryptocurrencies.
These rewards are often perceived in the form of interest or dividends. The yield varies depending on the blockchain, the amount staked and token inflation.
For example, some platforms offer an annual percentage yield (APY) of 5 to 20% or more.
- Securing the network
Staking plays a key role in securing the blockchain network. Validators, who are chosen to validate transactions, stake a certain amount of tokens. This economic incentive ensures that validators act honestly.
The locking of funds in the staking process guarantees protection against attacks and encourages participants to maintain the stability of the network. Dishonest behavior (e.g., attempted double spending) can result in sanctions, such as the loss of tokens (slashing), which enhances security.
- Low energy consumption
Unlike mining (Proof-of-Work), staking (Proof-of-Stake) requires much lower energy consumption. Indeed, there is no need for powerful computer equipment to perform complex calculations. Validators participate in the network by locking their tokens, which saves energy resources.
This feature makes staking a more environmentally friendly and sustainable alternative to traditional validation methods such as mining, which is often criticized for its high environmental impact.
3.2 Comparison with other methods of investing in crypto
Staking is a method of investing in cryptocurrency that differs from other popular options:
Trading
Trading is based on buying and selling cryptos according to market prices. It requires constant analysis and is riskier than staking, which generates passive income with less volatility.
Yield Farming
Yield farming consists of providing liquidity to DeFi platforms in exchange for rewards. Although potentially more profitable, it exposes you to the risk of hacking and smart contract bugs, unlike staking, which offers more stable returns.
Loans
Lending your cryptos allows you to generate interest, but involves dependence on third-party platforms and a risk of default. Staking, on the other hand, allows for more autonomous participation in the blockchain with reduced risk.
💡 Staking is characterized by its stability and its key role in securing the network, offering a good compromise between yield and security.
4. How to stake your cryptocurrencies?
4.1 Choosing a cryptocurrency to stake
Before you start staking, it is important to choose the cryptocurrency you want to stake. Some cryptocurrencies are more popular and offer better returns than others. Here are some examples of common cryptocurrencies for staking:
1. The most popular cryptocurrencies for staking
Ethereum (ETH): After the transition to Ethereum 2.0 and the switch to PoS, ETH has become one of the most popular cryptocurrencies for staking. The returns are relatively competitive, and it is a widely adopted network.
Solana (SOL): Solana is a fast and efficient blockchain network that also uses PoS. Staking on Solana is popular thanks to its speed and low transaction costs.
Polkadot (DOT): Polkadot uses NPoS (Norated Proof-of-Stake) for transaction validation. It allows validators to be appointed and provides attractive returns while contributing to interoperability between different blockchains.
2. Criteria to consider when choosing a cryptocurrency to stack
- Yield (APY): The annual percentage yield (APY) is one of the main criteria to consider. It determines the return you can expect on your investment. This rate can vary depending on the blockchain, the amount staked and token inflation.
- Security: Network security is essential. Choose a cryptocurrency with a proven consensus mechanism (PoS, DPoS, etc.) and infrastructure to reduce the risk of failure or hacking.
- Liquidity: Make sure that the cryptocurrency you choose for staking has good liquidity, i.e. that it is easy to buy, sell or transfer without disrupting the market.
4.2 How to stake
There are several ways to stake, each with its advantages and disadvantages.
Staking on a personal wallet (Ledger, Trust Wallet):
- Ledger : One of the most popular hardware wallets that allows you to securely store cryptocurrencies such as Ethereum, Cardano, and Solana while participating in staking.
- Trust Wallet: A popular mobile wallet that also allows you to stake directly on certain cryptocurrencies. It is convenient for those who prefer quick access while having full control over their funds.
Advantages: You retain total control over your private keys and tokens. More secure if you are an experienced user.
Disadvantages: You will have to manage your own staking and understand how to validate it yourself.
Staking on an exchange platform (Binance, Coinbase, Kraken):
- Binance: One of the world’s largest exchange platforms, Binance offers staking services for many cryptocurrencies, with attractive returns.
- Coinbase: This platform also allows you to stack cryptocurrencies such as Ethereum and Cardano. It’s a simple option for beginners.
- Kraken: Kraken also offers staking for many cryptos and allows you to earn rewards directly on the platform.
Advantages: Ease of use and no need to manage an external wallet.
Disadvantages: You have to trust the platform with the security of your funds, which adds a risk.
Decentralized staking via pools (Lido, Rocket Pool):
- Lido: Lido allows you to stack cryptocurrencies such as Ethereum 2.0, while offering the possibility of using staking tokens that can be reused in DeFi applications.
- Rocket Pool: Another decentralized staking service, mainly focused on Ethereum. Rocket Pool allows you to participate in staking without having to manage the 32 ETH required to be a validator.
Advantages: Decentralized staking allows you to participate in the network without having to worry about validator management.
Disadvantages: Fees may apply and management is a little less direct than staking via centralized platforms.
4.3 Guide to starting staking
We will see how to start staking step by step
- Create a wallet
Choose a wallet compatible with the cryptocurrency you wish to stake. If you opt for a hardware wallet such as Ledger , follow the steps to set up your device. If you use a software wallet such as Trust Wallet , download the application and create an account.
- Buy tokens
Buy the cryptocurrency of your choice on an exchange platform, such as Binance , Coinbase , or Kraken , or via DEXs (decentralized exchanges). Then transfer the tokens to your wallet if you use a personal wallet, or you can bet directly via the platform.
- Deposit and validation
Deposit your tokens in the staking process, either by showing your cryptos to a validator or by using a dedicated interface on the exchange platform. If you stake via an exchange platform, the steps will be automated and simple.
If you bet on a wallet or a decentralized solution, you may need to approve certain transactions or choose pools of validators.
- Blocking time and associated risks
The blocking time (or blocking period) varies depending on the cryptocurrency and the network. During this period, your tokens will not be accessible for sale or transfer.
Risks: In the event of malicious behavior by validators, hacking of the platform or slashing (loss of funds due to misconduct), there is a risk of partial or total loss of your tokens.
💡Staking is an interesting method for generating passive income while contributing to the security of a blockchain network. However, it is crucial to choose the right cryptocurrency to stake, the method, and to understand the risks associated with each step before starting.
5. How much can you earn from staking?
Staking returns vary considerably depending on the cryptocurrencies and platforms used.
5.1 Factors influencing returns
APY (Annual Percentage Yield)
The APY represents the annual rate of return you can expect when you immobilize a cryptocurrency.
Some networks offer fixed APYs, while others have fluctuating returns based on supply and demand.
Example: The APY on Ethereum varies according to the total number of ETH staked and the network rewards.
Token inflation
If the token inflation is too high, the gains can be diluted and the value of the token can fall.
Example: Polkadot (DOT) with inflation of around 10% per year, which means that staking rewards must be higher than this rate to be truly profitable.
Staking duration and lock-up periods
Some networks impose a lock-up period , during which your tokens are locked and cannot be withdrawn.
Example: Ethereum imposes an unlocking period that can take several days after staking has stopped.
Fees applied by platforms or validators
If you stake via a staking pool, an exchange or a validator, commission fees may be applied, in particular to your earnings.
Example: Lido charges a 10% fee on ETH staking rewards.
5.2 Comparison of the returns of the main cryptos
Here is a comparison table of the most popular cryptocurrencies: Ethereum, Solana, Cardano and Polkadot. The values are estimated averages and may vary depending on the market and the platforms used.
| Criterion | Bitcoin | Ethereum 2. 0 |
| Consensus protocol | Proof of Work (PoW) | Proof of Stake (PoS) |
| Annual energy consumption | 90-160 TWh | ~0.01 TWh (estimate) |
| Consumption per transaction | ~707 kWh | ~0.03 kWh (estimate) |
| Carbon footprint per transaction | ~300 kg of CO2 | Negligible |
| Reduction in consumption | – | 99.95% compared to Ethereum 1. 0 |
This table highlights the significant difference in energy consumption between Bitcoin, which uses Proof of Work, and Ethereum 2.0, which has switched to Proof of Stake. Ethereum’s transition to PoS has drastically reduced its energy consumption, making it negligible compared to that of Bitcoin.
11.2 Green initiatives related to staking
Eco-responsible blockchains
Several blockchain initiatives and projects aim to reduce the sector’s environmental impact:
- Crypto Climate Accord : Launched in April 2021, this project aims to decarbonize the crypto-asset industry with three main objectives:
- Enable all blockchains to run on 100% renewable energy by 2025.
- Develop an open source accounting standard to measure industry CO2 emissions.
- Achieve net zero total emissions by 2040.
- Green blockchains: New low-energy blockchains are emerging, such as Solana, Polkadot, Tezos and Cardano.
Some staking platforms invest in renewable energy to power their infrastructure .
Examples: Near Protocol and Chia use green energy sources to operate.
3. Corporate initiatives:
- Polygon bought $400,000 worth of carbon credits in June 2022 to offset all greenhouse gases emitted since the creation of its blockchain.
- MultiversX (formerly Elrond) aims to be carbon negative.
- Zumo, a member of the Crypto Climate Accord, aims to achieve zero carbon emissions in the field of cryptocurrencies by 2030 by promoting the use of renewable energy sources for mining.
💡Staking considerably reduces the environmental impact of cryptocurrencies by reducing energy consumption and electronic waste . With the rise of eco-friendly blockchains , PoS is establishing itself as a sustainable alternative to traditional mining.
12. Real-life use cases of staking
Staking is not only a way to generate passive income, it also plays a fundamental role in securing Proof-of-Stake (PoS) blockchains and enables the development of many decentralized projects.
12.1 Projects and platforms using staking
Securing PoS networks
Several major projects use staking to secure their Proof of Stake networks:
- Ethereum 2.0: Since its transition to PoS, Ethereum has been using staking to validate transactions and secure the network. Validators must stake a minimum of 32 ETH to participate.
- Polkadot (DOT): This interoperable blockchain allows DOT holders to stake their tokens to secure the network and participate in governance. Staking on Polkadot can offer returns of up to 15% per year.
- Solana (SOL): Known for its speed and low fees, Solana uses staking to maintain the security of its network. Annual returns for SOL staking range from 7% to 11%.
- Cardano (ADA): This project uses the Ouroboros Proof of Stake protocol, allowing ADA holders to stake their tokens with average annual returns of between 5% and 9%.
The most used staking platforms
- Centralized platforms: Binance, Kraken, Coinbase (simplified staking but with fees).
- Decentralized platforms: Lido, Rocket Pool (liquid staking without an intermediary).
- Compatible wallets: Ledger, Trust Wallet, Exodus (enhanced security).
12.2 Concrete examples of success thanks to staking
Analysis of projects that have integrated staking
Lido Finance
It revolutionized Ethereum staking by introducing the liquid stETH token, representing staked ETH, and manages more than 40% of ETH staking on Ethereum 2.0.
This system allows users to benefit from staking rewards while maintaining the liquidity of their assets.
Ethereum 2.0: The historic transition to PoS
Ethereum abandoned its Proof-of-Work (PoW) model in 2022 for Ethereum 2.0, based on staking.
More than 30 million ETH have been staked, guaranteeing accumulated network security.
Impact: 99.95% reduction in energy consumption .
PancakeSwap (CAKE):
This DeFi platform on Binance Smart Chain has successfully integrated staking of its CAKE token.
The annual returns for staking CAKE vary between 31% and 42%, making it one of the most attractive options on the market.
Algorand (ALGO):
Algorand has set up an accessible staking system, with a minimum of a single token to become a validator.
Annual returns vary between 5% and 10%, attracting many participants to the network.
Best Wallet Token ($BEST):
This emerging project allocates 8% of its tokens to staking, offering an impressive APY of 230%.
This strategy aims to build holder loyalty and support the growth of the ecosystem.
Avalanche (AVAX):
Avalanche has successfully integrated staking, allowing AVAX holders to secure the network.
Staking is available from 25 AVAX, with average annual returns between 8% and 14%
💡Staking has become a central element in securing modern blockchain networks, while offering attractive incentives to participants. The success of these projects underlines the growing importance of staking in the crypto ecosystem, promoting both network security and user engagement.
13. Glossary of staking terms
Cryptocurrency staking is based on a set of technical concepts that are essential to understand. Here is a list of the main terms associated with staking and their definitions.
13.1 Definitions of technical terms
Validator
A validator is a participant in the blockchain network who verifies and validates transactions. In Proof of Stake (PoS) systems, validators must stake a minimum amount of cryptocurrency to participate in the consensus process and secure the blockchain. In case of malicious behavior, they risk penalties called slashing.
Slashing
Slashing is a penalty applied to validators in a PoS network when they act maliciously or do not respect the rules of the protocol. This can result in the loss of some or all of the cryptocurrencies staked by the validator and those who have delegated their funds to the validator.
APY (Annual Percentage Yield)
APY represents the annual return on an investment, including compound interest. In staking, it indicates the percentage of rewards that can be expected to be received in a year based on the amount staked.
For example, an APY of 10% means that an investment of 100 tokens could generate an additional 10 tokens in one year.
Staking pool
A staking pool is a group of assets staked by several cryptocurrency holders. Participants pool their resources to reach the threshold required to validate blocks in a PoS blockchain. The rewards obtained are then distributed proportionally among the pool members.
Liquid Staking
Liquid staking allows users to stake their cryptocurrencies while maintaining their liquidity through representative tokens (e.g. stETH for Ethereum or rETH for Rocket Pool). These tokens can be used in DeFi applications or traded freely, while continuing to generate rewards.
APR (annual percentage rate)
The APR is similar to the APY, but it does not take compound interest into account. It represents the annual rate of return based solely on the initial amount staked.
Lock-in period
The blocking period is the time during which the staked funds are immobilized and cannot be withdrawn or used. It varies according to the blockchains and can range from a few days to several weeks (e.g. 28 days for Polkadot).
Delegation
Delegation is the process by which a cryptocurrency holder entrusts their assets to a validator or pool to participate in staking without having to directly manage the technical aspects.
Proof-of-Stake (PoS)
Consensus mechanism where the validation of transactions and the creation of new blocks
are based on the quantity of cryptocurrencies staked, rather than on computing power as in Proof-of-Work (PoW).
DPoS (Delegated Proof-of-Stake)
Delegated version of PoS where token holders elect validators to secure the network on their behalf. Examples: TRON, EOS
NPoS (Norated Proof-of-Stake)
Variant of PoS used by Polkadot, where validators are chosen by nominators
who delegate their staking to the most reliable validators.
Liquid Staking
Type of staking where users can stack their tokens while maintaining liquidity thanks to derivatives (example: Lido with stETH for Ethereum).
Funds Lock-up
Period during which staked cryptos cannot be withdrawn. This period varies according to the blockchain (e.g. Ethereum imposes a variable unblocking time).
APR (Annual Percentage Rate)
Interest rate without taking compound interest into account, unlike the APY .
Minimum Stake
Minimum amount of cryptocurrency required to participate in staking. E.g.: 32 ETH to become a validator on Ethereum 2.0 .
Cold Staking
Staking method carried out via an offline wallet (hardware wallet) for greater security.
💡This glossary covers the essential terms related to staking, allowing both beginners and experienced users to better understand this practice and its mechanisms.
FAQ: Answers to frequently asked questions
What is staking?
Staking consists of immobilizing cryptocurrencies to participate in securing a blockchain network and receive rewards in exchange.
What are the advantages of staking?
Generation of passive income
Participation in securing the network
Potentially less risky than active trading
What is the average return on staking?
The return on staking varies depending on the cryptocurrency and the platform used. On average:
- Ethereum (ETH): 3% 5% APY: 3% – 5% TAEG
- Cardano (ADA): 4% 6% APY: 4% – 6% TAEG
- Solana (SOL): 6% – 8% APY: 6% – 8% TAEG
Polkadot (DOT): 10% 15% APY Yields may fluctuate depending on market conditions and the policies of each blockchain.: 10% – 15% APY
Yields may fluctuate depending on market conditions and the policies of each blockchain.
Is there a minimum amount required to get started?
It all depends on the type of staking:
Staking on a personal wallet : Some blockchains impose a minimum (e.g. 32 ETH to be a validator on Ethereum 2.0).
Staking on an exchange platform: No strict minimum, some services allow staking with just a few dollars.
Staking via pools: Allows access to staking with small amounts, as the funds are pooled.
What are the risks of staking?
- Market volatility: The value of staked cryptos can fall.
- Risk of hacking or bankruptcy of platforms
- Period of funds being frozen
- Possibility of slashing (penalties)
Which tokens will be the best to stake in 2025?
The most popular and commendable cryptocurrencies for staking in 2025 include:
Ethereum (ETH) – Secures the Ethereum network with stable returns.
Cardano (ADA) – Fast blockchain with accessible and regular staking.
Solana (SOL) – High returns and fast transactions.
Polkadot (DOT) – Very good APY with an innovative staking model.
Avalanche (AVAX) – Strong growth and profitable staking.
Cosmos (ATOM) – Widely used for connectivity between blockchains.
What is the difference between APY and APR?
APY (Annual Percentage Yield) includes compound interest, while APR (Annual Percentage Rate) does not take it into account.
Can I withdraw my staked cryptos at any time?
It depends on the platform and the cryptocurrency. Some impose blocking periods, others offer flexible staking.
Do I have to pay taxes on staking gains?
Yes, in most countries, staking income is taxable. Consult a tax advisor to find out the rules specific to your situation.
What is the difference between staking and mining?
Staking uses Proof of Stake and requires holding cryptos, while mining uses Proof of Work and requires significant computing power
Is staking environmentally friendly?
Yes, staking consumes much less energy than traditional mining, making it more environmentally friendly.
Can I stake with a hardware wallet?
Yes, many hardware wallets support staking for various cryptocurrencies, offering increased security.
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