Crypto Staking: Definition and How It Works
Updated on 28 July 2026
Crypto staking means locking up a portion of your tokens on a proof-of-stake blockchain (Proof of Stake, PoS) to validate transactions and earn rewards. Often presented as a less energy-intensive alternative to Bitcoin mining, it offers no guarantee: rewards fluctuate and the capital remains exposed to volatility.
- Rewards are expressed as an annual percentage yield (APY) and depend on the amount staked, the duration and the network's circulating supply.
- Ethereum, Cardano, Tezos, Solana and Polkadot are among the cryptocurrencies that can be staked; Bitcoin, which runs on proof of work, cannot be staked.
- Staking carries specific risks: slashing (a penalty imposed on the validator) and a lock-up period that prevents any immediate withdrawal.
- You can stake through an exchange, which is more accessible, or through decentralised finance (DeFi), which requires more technical knowledge.
What is crypto staking?
With crypto staking, you lock up a certain quantity of tokens in a digital wallet to help maintain a blockchain network. This process is a form of passive investment that lets crypto holders generate income.
By staking, holders help validate new blocks on the blockchain. In return for this participation, they receive rewards, often in the form of additional tokens. This mechanism supports the network's security and operational capacity.
Through staking pools, smaller investors can combine their resources to increase their chances of validating blocks and earning rewards. Ethereum, for instance, uses staking in its Proof of Stake (PoS) consensus mechanism.
How does crypto staking work?
Crypto staking relies on the proof-of-stake principle and requires validators to maintain the network's security and efficiency.
The role of proof of stake
Proof of Stake (PoS) is a consensus mechanism that lets cryptocurrency holders actively participate in validating transactions. Unlike Proof of Work (PoW), PoS does not require large amounts of energy, because block validation is carried out by participants known as validators, based on their stake in the cryptocurrency. Under this system, the chances of validating a block and earning rewards are proportional to the amount of currency an investor puts at stake, a practice known as "staking".
Validators in staking
Validators play a crucial role in staking. They are responsible for creating new blocks and verifying transactions to ensure the blockchain's integrity. Parties wishing to become validators must lock up a certain amount of their coins as collateral, called a "stake". If they act dishonestly or harm the network, they risk losing part or all of their stake. Staking-as-a-service platforms let crypto holders take part in the staking process without running their own validation node. Some set up staking pools, letting smaller investors combine their resources to increase their chances of becoming validators and earning rewards.
finally regulated
Investing involves risk, including the risk of capital loss. Crypto-assets are highly volatile: you could lose some or all of your investment. Past performance is not indicative of future performance. Finary is authorised as a Crypto-Asset Service Provider (CASP, "PSCA" in French) by the AMF under the MiCA regime.
Which cryptocurrencies can be staked?
Crypto investors can put their digital assets to work through staking, a practice that generates passive rewards. According to Ethereum.org, Ethereum switched to proof of stake at The Merge (15 September 2022); it is one of the best-known cryptocurrencies that support staking, letting Ether holders help secure the network.
Other currencies such as Cardano and Tezos are known for their proof-of-stake protocols, which favour staking. Holders of these cryptocurrencies can earn rewards by taking part in the transaction-validation process on their respective networks. Solana and Polkadot also offer staking opportunities, where users can stake their tokens to help ensure network stability and security while earning rewards.
It's worth noting that staking Bitcoin is not possible, because it uses a proof-of-work protocol rather than proof of stake. That requires running powerful computing operations, unlike staking, which simply means "locking" cryptocurrencies into the network. Investors should look into the details of staking for each cryptocurrency before committing, since the process and the rewards can vary considerably.
Advantages of crypto staking
Crypto staking offers significant advantages for investors looking to diversify their exposure. It is an accessible way to generate additional income.
Generating passive income
By choosing to stake, crypto holders can receive passive income similar to dividends. These rewards are often expressed as an annual percentage yield (APY). As a guide, Ethereum staking yielded around 3 to 4% gross per year at the end of May 2026, a level that varies widely between networks and over time. The displayed APY is not guaranteed and varies with market conditions. Unlike a regulated savings account, staking offers no capital guarantee and carries a risk of total loss.
Contributing to the blockchain
By taking part in staking, you contribute to the blockchain's security and efficiency. The process helps validate transactions and keep the decentralised network running. It gives participants the chance to play an active role in the development of blockchain projects while reaping the rewards of their investment.
Risks associated with crypto staking
Crypto staking is a practice that can generate gains, but it carries risks that should not be underestimated and need to be understood.
Financial and technical risks
Staking involves significant financial risk tied to the volatility of the crypto market. Assets can see sharp price swings in a short time, directly affecting the value of the capital invested. On top of that, there are risks linked to technical errors or malfunctions of the software or platform used for staking, which can result in a loss of funds.
Another risk is the lock-up period, during which users cannot withdraw their tokens. Throughout this period, they remain exposed to market swings and can see their assets lose value if the market turns against them.
Security and staking
Questions around security are critical in crypto staking. Stakers must protect their private keys against fraud and intrusion to avoid losing tokens. Beyond these cybersecurity risks, there is also the risk of slashing. This is a penalty imposed by the blockchain protocol when a validator acts maliciously or fails to meet certain protocol requirements. This slashing can result in a partial or total loss of the assets committed to staking.
How do you set up crypto staking?
Setting up crypto staking calls for a careful choice of staking platform. Exchanges often offer built-in staking options for investors. It is essential to choose a reputable, secure platform to avoid security risks.
It is also important to have a secure crypto wallet. Some investors choose hardware wallets for added security. Using digital wallets, users can sometimes take part in staking directly through the platform's interface.
The technical knowledge required depends on the staking method chosen. For staking through an exchange, the knowledge needed is generally lower. Choosing to stake through decentralised finance (DeFi), however, can require deeper knowledge to navigate more complex protocols.
Here are the general steps to get started:
- Choose the cryptocurrency to stake.
- Select a trusted staking platform.
- Transfer the cryptocurrency from the wallet to the staking platform.
- Start staking through the interface provided by the platform.
Finally, the choice between joining a staking pool or staking individually will depend on the investor's personal preferences and the potential rewards. It is essential to research each option thoroughly to make an informed choice.
DPoS (Delegated Proof of Stake) and its role in staking
DPoS is an evolution of the proof-of-stake mechanism, designed to increase staking participation and improve decision-making capacity within decentralised networks.
Understanding DPoS
This mechanism, Delegated Proof of Stake (DPoS), is built around delegating token holders' staking power. Under this system, token holders elect validators to secure the network. This approach allows for faster decision-making and greater blockchain scalability thanks to a limited number of chosen validators.
DPoS vs PoS
Unlike traditional Proof of Stake (PoS), where every token holder can potentially become a validator, DPoS lets crypto owners delegate their staking power to third parties. This encourages the creation of staking pools run by staking-as-a-service providers, allowing broader participation, even for those with fewer resources or less technical knowledge. DPoS stands out for its efficiency and its ability to foster decentralised participation in the crypto ecosystem.
Which platform should you choose for crypto staking?
When it comes to staking cryptocurrencies, choosing a reliable platform is essential. Finary gives access to several crypto-assets. Bitpanda stands out by offering the option to double rewards and reinvest them automatically.
Nexo offers staking services on various crypto-assets. In France, Feel Mining is recognised as an expert in passive income from cryptocurrency. Binance offers staking services on numerous crypto-assets.
CEX.io offers a different experience with a crypto savings account, providing an alternative to classic staking. eToro stands out as a versatile broker suited to a range of investment needs. Finally, Kraken wins users over with its intuitive interface and moderate fees.
| Platform | Advantages |
|---|---|
| Finary | Built-in portfolio tracker, regulated crypto access (CASP, "PSCA" in French / MiCA) |
| Bitpanda | Automatic reward doubling |
| Nexo | Diversified staking offering |
| Feel Mining | Passive-income expertise, French specialist |
| Binance | Large catalogue of crypto-assets and extended features |
| CEX.io | Innovative crypto savings account |
| eToro | Versatility and adaptability |
| Kraken | User-friendly interface, reasonable fees |
Ultimately, the choice of platform should be based on individual preferences, return expectations and ease of use.
finally simple
Investing carries risks, including the risk of capital loss. Crypto-assets are highly volatile: you may lose all or part of your investment. Past performance is not a reliable indicator of future performance. Finary is authorised as a crypto-asset service provider (CASP) under the MiCA regime by the AMF.
Frequently asked questions
What tax applies to crypto staking rewards?
In France, capital gains realised on the disposal of digital assets from staking are subject to the flat tax (PFU) of 31.4%, unless your total annual disposals stay below €305. How rewards should be treated at the moment they are received remains debated: for more detail, see our guide to cryptocurrency taxation.
How do you start staking cryptocurrencies?
First, choose a cryptocurrency that supports staking, then a reliable platform, whether an exchange or a decentralised finance protocol. You then transfer your tokens to the platform, select a staking offer and lock up the desired amount to start earning rewards.
How is the staking reward calculated?
The reward depends on several factors: the number of tokens staked, the lock-up duration, the cryptocurrency's inflation rate and the total number of tokens staked on the network. The higher the share of the network that is staked, the lower individual returns tend to be.
What return can you expect from staking?
Returns vary widely depending on the cryptocurrency and market conditions. As a guide, Ethereum staking yielded around 3 to 4% gross per year at the end of May 2026, but this rate is not guaranteed and the capital remains exposed to price volatility.
Sources
Impots.gouv.fr, declaring capital gains or losses on digital-asset disposals (French)
Ethereum.org, The Merge: Ethereum's transition to proof of stake (15 September 2022)
Regulatory disclaimers: Marketing communication. Investing carries a risk of partial or total capital loss. Past performance is not a reliable indicator of future performance. This article is provided for information and educational purposes only; it does not constitute personalised investment advice, a buy or sell recommendation, or tax advice. Crypto-assets are highly volatile and carry a risk of total capital loss. They benefit from no capital guarantee and are not covered by deposit guarantee or investor compensation schemes. Before investing, read the Key Information Document (KID) and, where relevant, consult an authorised adviser. Finary SAS, an investment firm authorised by the ACPR (no. 19283), member of AMAFI. Insurance broker registered with ORIAS (no. 21001279), member of the CNCGP (association approved by the AMF). Crypto-Asset Service Provider (CASP) authorised by the AMF under the MiCA regime, references no. A2026-026 and no. N2026-008.
