Staking
What Does Staking Mean?
Staking refers to locking up your tokens in order to earn rewards.
In crypto, staking involves committing your tokens to a blockchain or protocol, which helps secure and operate the network while earning incentives. Staking is most common on “Proof of Stake” blockchains, where validator selection is based on the amount of staked tokens. You can delegate your assets to validators—nodes responsible for block production and verification—or use “liquid staking” to receive tradable voucher tokens in exchange for your staked assets.
After Ethereum’s Merge, the network switched to Proof of Stake, allowing users to stake ETH and earn annualized returns; Solana uses a similar approach, where users stake SOL to support the network and receive rewards. These incentives are typically sourced from protocol issuance or a share of transaction fees.
Why Should You Understand Staking?
Staking allows holders to earn relatively stable on-chain returns.
Its value lies in several aspects: first, it enhances network security—the more tokens staked and the more decentralized their distribution, the safer the network; second, it offers interest and token rewards, and some projects grant governance voting rights; third, many new projects use staking as a requirement for participation in events like airdrops or whitelists, favoring genuine contributors.
However, staking is not risk-free. Token price volatility can offset your gains; delegating to unreliable validators may result in “slashing”—penalties that can reduce or even forfeit your rewards and principal if nodes misbehave or go offline; some staking models have lock-up periods, limiting liquidity until the term ends; contract-based staking also carries smart contract vulnerability risks.
How Does Staking Work?
The core of staking is binding your tokens to a validator to participate in block production and verification.
On Proof of Stake chains, validators act as security guards, with block production rotating based on stake weight. Regular users usually opt for “delegated staking,” entrusting their tokens to reputable validators who charge a small commission and distribute the remaining rewards proportionally.
Running your own node requires technical know-how and hardware, along with maintaining uptime, timely updates, and robust security—otherwise, you risk being slashed. This route suits teams or professionals, but is not recommended for beginners.
“Liquid staking” (LST) enables you to exchange staked assets for tradable receipt tokens such as stETH after staking ETH. These tokens can be used for lending, trading, or providing liquidity, all while continuing to accrue staking rewards—essentially functioning like a certificate of deposit that remains usable.
There is also “restaking,” which leverages your staked security for additional services to earn extra rewards. However, this compounds risk and should be evaluated carefully.
Common Forms of Staking in Crypto
Staking appears across public blockchains, DeFi applications, and exchange-based wealth management products.
At the public chain level, networks like Ethereum, Solana, and Cosmos support delegated staking. Users select validators in their wallets, enter an amount to stake, sign the transaction, and begin earning interest—with rewards distributed daily or per set periods.
In DeFi, liquid staking tokens (LSTs) are commonly used as collateral for lending or as assets in decentralized exchange trading pairs—allowing you to earn both staking rewards and lending/trading fees. For example, you could deposit stETH into a lending protocol and use borrowed stablecoins for other strategies. However, beware that LSTs may trade below face value during liquidity crunches.
On exchanges such as Gate: Gate’s “Wealth/Staking Zone” lists products like ETH and SOL staking, showing projected APYs, redemption rules, and lock-up periods. Users can delegate with one click to pre-vetted validators without manual selection or on-chain operations.
For new project launches, teams may require community members to stake tokens to gain governance rights or qualify for airdrops. For instance, a protocol may announce: “Stake for X days to participate in governance voting,” ensuring only long-term supporters join decision-making.
How Can You Mitigate Staking Risks?
Diversification, due diligence, and liquidity planning are essential.
Step 1: Choose reliable validators. Review their commission rates, uptime stability, and historical slashing records. Many wallets and platforms display these metrics—prioritize nodes with proven stability.
Step 2: Diversify allocations. Avoid concentrating all funds with one validator or staking method. Delegate across multiple nodes or split funds between liquid staking and readily available reserves.
Step 3: Understand withdrawal mechanisms. Unstaking times vary across chains and products—Ethereum requires a queue for withdrawals; some exchange products have fixed lock-up periods. Plan cash flow ahead to avoid being locked out when funds are needed.
Step 4: Beware contract and discount risks. Liquid staking offers flexibility but LSTs may depeg under market stress or mass withdrawals. Opt for audited protocols with risk reserves and pay attention to redemption paths and costs for converting back to native tokens.
On Gate, start by reviewing details in the “Wealth/Staking Zone”—including APY ranges, fees, redemption policies, and risk warnings; test with small amounts first to confirm reward distribution and exit experience; then scale up gradually based on your target yield and liquidity needs.
Recent Staking Trends & Noteworthy Data
This year, staking rates and annual yields on major Proof of Stake chains show trends of rising participation and stable average returns.
For example, public dashboard data from Q3-Q4 2025 indicates Ethereum’s staking APY is roughly 3%-4%, with total network staking ratios around 25%-35%—an increase from 2024 levels. Yield gaps between individual validators have narrowed, with more returns coming from integrated scenarios (such as LST yield differentials in lending).
Solana’s staking ratio remains high (about 65%-70%), with APYs in the 6%-8% range. As network performance and ecosystem applications grow, validator numbers and delegation spread have increased. Returns are influenced by inflation parameters and transaction fees.
For liquid staking (LST), total value locked (TVL) reached several tens of billions USD in the past six months of 2025—an expansion from 2024. Growth is driven by user demand for yield-generating yet liquid assets, plus easy access via exchanges and wallets. Discount risk during redemptions remains a key market concern.
Restaking continues its upward trajectory this year: TVL across multiple protocols rose steadily from late 2024 through Q3 2025, surpassing billions of dollars. Extra rewards come from task points, protocol revenue sharing, and potential airdrops—but risks compound, so assess safety versus return carefully.
On regulated exchanges, transparency around validator sources and withdrawal rules is increasingly emphasized. For example, Gate’s staking products now clearly mark projected APY ranges, redemption cycles, and fees—improving user experience but requiring careful product comparison before choosing.
How Is Staking Different From Mining?
Staking relies on token weight; mining relies on computational power and electricity.
Mining—typically referring to Proof of Work—requires GPUs or specialized miners that consume substantial electricity to compete for block production rights. Staking involves locking up tokens and receiving rewards based on stake amount and validator performance. Mining’s main costs are hardware and electricity; staking’s main risks are price volatility, validator reliability, and lock-up duration.
Participation-wise, staking is accessible to regular token holders through delegation or exchanges; mining demands specialized equipment and infrastructure. In terms of environmental impact and regulatory trends, Proof of Stake and staking are favored by policymakers and institutional investors. Each method suits different asset types and risk profiles—choose according to your needs.
Glossary
- Staking: The process where users lock crypto assets to gain network validation rights or earn rewards.
- Smart Contract: Self-executing code on blockchain that automates transactions without intermediaries.
- Gas Fees: Transaction fees required for executing operations or contracts on blockchain networks.
- Consensus Mechanism: The rules/protocols used by blockchain networks to validate transactions and create new blocks.
- Wallet Address: A unique identifier used for sending or receiving crypto assets—similar to a bank account number.
FAQ
What Is the Difference Between Collateralization and Staking?
Collateralization is a traditional finance concept—you use assets as loan collateral while retaining ownership. Staking is unique to blockchain: you lock crypto assets into the network to participate in validation and earn rewards. Simply put: collateralization is about borrowing funds; staking is about earning incentives.
Is Unstaking Bullish or Bearish?
Unstaking itself is neutral—the impact depends on context. Large-scale unstaking may signal upcoming sell-offs (bearish), but could also reflect normal liquidity needs. Key factors include the size/timing of withdrawals and overall market sentiment; always assess using on-chain data and project fundamentals.
What Is Staking Mining?
Staking mining means earning newly minted tokens plus transaction fees by locking crypto assets to help validate blockchain transactions. Compared with traditional mining—which requires significant computing power and energy costs—staking mining only requires holding assets. It has lower barriers to entry and is more eco-friendly.
What Do Beginners Need To Start Staking?
First, acquire enough tokens for staking (for example: ETH typically requires 32 tokens—but platforms like Gate offer lower minimums). Next, understand the specific network’s staking rules and risks such as lock-up periods or slashing penalties. Start small to gain experience before committing larger amounts.
Where Do Staking Rewards Come From?
Staking rewards primarily come from two sources: protocol inflation (newly minted tokens) and transaction fees collected by the network. The mix varies by chain—for instance, Ethereum staking rewards include both new token issuance and gas fee revenue. High reward rates generally mean higher risk—evaluate carefully.
References & Further Reading
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