Staking is like earning a reward for helping a blockchain run. On proof-of-stake (PoS) blockchains, people help secure the network by locking up their tokens. You can "delegate" your tokens to a validator—a computer that checks and adds new blocks of transactions.

When you stake, you support that validator with your tokens while still owning them and seeing them in your wallet. In return, you earn more of that token as a reward. Validators that stay online and follow the network’s rules earn rewards, which are shared with the people who stake with them. This process helps keep the blockchain accurate and secure—without using the heavy energy of mining.

How staking rewards work

Rewards appear as an estimated annual percentage yield (APY) of return, similar to how interest is displayed on a savings account. It reflects what you might earn over a year, these are paid out on a schedule (anywhere from minutes to days depending on the chain). They’re paid in crypto, not cash. When you stake, you earn more of the same token.

Typical staking rewards vary by network, validator fees, and the number of stakers at any given time. On large networks like Ethereum, returns are around 3% per year. Other blockchains can range from 2% to 18% depending on supply and demand, with many averaging around 5–7%.

Where do they come from?

  • Network issuance & fees: Many proof-of-stake networks automatically create new tokens and distribute them as rewards through their code—there’s no central authority deciding this. When a validator adds a valid block, the network’s software mints the reward and sends it directly to that validator’s wallet. Those rewards usually include newly created tokens, along with a portion of the transaction fees users pay when they send, swap, or interact with smart contracts on the network. Validators then share these rewards with the people who staked with them.

  • Compounding: If you re-stake what you earn, your balance can grow faster over time (some platforms auto-compound; others require a tap to restake). This is like earning interest on your interest.

  • After fees: Validators usually take a small fee before sharing rewards with you—check this percentage before you choose one.

Remember: reward rates can change, and token prices can rise or fall—staking helps the network, but it’s still an investment that moves with the market.

What to know before you stake

  • Lock-ups & unstaking: Some networks “lock” your staked tokens for a set period, meaning you can’t move or sell them until that lock period ends. If you change your mind and want to reaccess your tokens, you’ll need to “unstake”—a process that can take anywhere from a few days to several weeks, depending on the blockchain. If you might need your tokens soon, start with a small amount or pick a network with shorter unlock times.

  • Slashing: If a validator is offline for too long or doesn’t follow the network’s rules, the network can remove a small part of the tokens they staked. Sometimes the people who staked with them also lose a little, but the validator takes most of the hit.

  • Price swings: Earning rewards doesn’t protect you from price drops, so your tokens can still lose value if the market falls. If the token price drops, your total value can still fall - even while you’re earning.

(Note: in the U.S., rewards may count as income for tax purposes, and selling later can create a gain or loss. Keep records and check with a tax professional.)

How to stake using an exchange: 

Many people start by staking through a popular exchange:

  • Buy a supported PoS token (ETH, SOL, ADA availability varies by platform).

  • Find the Stake or Earn option on the asset's page.

  • Review the reward rate, validator fee, and lock-up period.

  • Start with a small amount and observe how rewards appear.

  • Understand how and when you can unstake, especially before committing more.

Key Takeaways 

Staking turns passive holding into active network participation with the potential for financial rewards. Start with a modest amount, understand the unstake timeline, and choose reputable validators or platforms. As with any investment, the value of your stake can go up or down regardless of the rewards you earn.