Staking

Last reviewed: July 2026

Staking is the process of locking up your cryptocurrency to help secure a blockchain network, in exchange for rewards.

How does it work?

On Proof of Stake (PoS) blockchains, validators must "stake" tokens in order to validate transactions. If they act badly, they can lose part of their stake (slashing).

PROOF OF STAKE

A validator puts up their own tokens as collateral. From there:

• If they validate honestly → they receive rewards
• If they act in bad faith → they lose part of what they put up (slashing)

That's the whole idea: make bad behavior cost money.

Direct vs. delegated staking

Direct staking (being a validator)

You run your own validator node. It requires:

• A minimum amount of tokens (e.g. 32 ETH for Ethereum)
• Dedicated hardware
• Technical knowledge
• Being online 24/7

Delegated staking

You delegate your tokens to an existing validator. They do the technical work and you receive a share of the rewards.

You delegate your tokens

The validator runs the node and charges a fee

Rewards minus their fee

You don't hand over custody: you delegate. The tokens stay yours.

Liquid Staking

Liquid staking lets you stake and keep using your tokens at the same time:

1. You deposit tokens (e.g. SOL)
2. You receive a "liquid" token (e.g. mSOL, jitoSOL)
3. The liquid token represents your stake
4. You can use the liquid token in DeFi
5. Meanwhile, you keep earning staking rewards

LIQUID STAKING

You deposit 10 SOL and receive a token in return, for example mSOL.

That token:

• Represents your SOL in staking
• Earns rewards on its own, without you doing anything
• Can be used in DeFi like any other token
• Can be sold whenever you want, without waiting out the unlock period

The ratio isn't 1:1 and it keeps changing: it reflects the rewards already accumulated.

Staking on Solana

Solana is popular for staking, with ~6-8% APY currently.

Option 1: Native staking in Phantom

1. Open Phantom
2. Go to your SOL balance
3. Tap "Start earning SOL"
4. Select a validator
5. Enter the amount to stake
6. Confirm

Option 2: Liquid staking with Marinade

1. Go to marinade.finance
2. Connect your wallet
3. Deposit SOL
4. Receive mSOL
5. Your mSOL earns rewards and you can use it in DeFi

Option 3: Jito (with MEV rewards)

Similar to Marinade but includes MEV rewards:

1. Go to jito.network
2. Deposit SOL
3. Receive jitoSOL

Comparing options on Solana

Option	Approx. APY	Liquidity	Complexity
Native staking	6-8%	Unlock period (~2-3 days)	Low
Marinade (mSOL)	7-8%	Immediate (you can sell)	Medium
Jito (jitoSOL)	7-9%	Immediate	Medium

Risks of staking

1. Slashing

If the validator you delegated to acts badly or has serious technical problems, there can be a penalty. This is rare on Solana; it's stricter on Ethereum.

2. Unlock period

With native staking, there's typically a waiting period to withdraw:

• Solana: ~2-3 days
• Ethereum: Variable (can be weeks)
• Cosmos: 21 days

3. Price risk

If the token's price falls, your staking rewards may not make up for the loss in value.

4. Protocol risk (liquid staking)

Liquid staking tokens (mSOL, jitoSOL) depend on smart contracts that can have bugs.

5. Depeg risk (liquid staking)

The liquid token can temporarily lose its peg to the underlying token under extreme market conditions.

Realistic returns

Blockchain	Order of magnitude of the APY
Ethereum	low, single digit
Solana	single digit, mid-to-high
Small or new networks	double digit

A high APY is not a gift

Yields change all the time, so look them up at the source before deciding, not in a guide. And watch the logic: when a network pays a lot more than the rest, it's usually because it's issuing new tokens to attract people. That dilutes everyone who already holds the token. A 20% annual payout in a token that drops 40% is a loss.

APY is not a guaranteed return

• Staking rewards are paid in the same token
• If the token's price drops 20% and you earn 8% in staking, you're still losing in USD
• APY can vary with network conditions

Staking vs. Holding

Aspect	Just holding	Staking
Liquidity	Immediate	May have a lock period
Extra yield	No	Yes
Added risk	No	Slashing, smart contract
Complexity	None	Low-Medium

For long-term holders of PoS tokens, staking generally makes sense. The rewards offset network inflation and provide extra return.

How to choose a validator

If you're doing delegated staking, choose your validator carefully:

□ Reasonable fee (5-10% is typical)
□ High uptime (>99%)
□ Not over-delegated
□ Has a clean slashing history
□ Known community/company

Summary

• Staking locks up tokens to secure the network in exchange for rewards
• You can delegate to a validator without running your own node
• Liquid staking gives you liquidity while you earn rewards
• There are risks: slashing, unlock periods, smart contracts
• For long-term holders of PoS tokens, it's generally worth it
• Choose validators with a good track record and reasonable fees

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