Staking is committing a cryptocurrency to help secure a proof-of-stake blockchain, in exchange for a share of the rewards that network pays for the work. Where proof of work has miners spend electricity to win the right to add a block, a proof-of-stake network selects validators in proportion to the coins they have committed. A validator that signs correctly earns rewards; one that goes offline or signs conflicting blocks can be penalised and lose part of its stake, a penalty called slashing.
The shapes it takes
- Solo staking. The holder runs validator software and keeps the keys. Ethereum sets the stake for one validator at 32 ETH.
- Pooled or liquid staking. Holders combine coins through a service; some services issue a token representing the staked position, which can move while the underlying coins stay committed.
- Custodial staking. An exchange or custodian stakes on the holder's behalf and passes on a portion of the reward.
The same trade-off runs through all three: less operational work, more counterparty exposure. Only solo staking leaves the keys with the holder - see self-custody.
A reward rate is not a yield
Staking rewards are paid in the coin that was staked. If that coin falls further than the rewards accrue, the position is worth less in dollar terms despite having earned. The rate itself moves with how much total stake is competing for the same rewards, and entering or leaving the validator set can involve a queue during which the coins are neither tradable nor earning.
How MoonWire treats it
In our coverage staking usually arrives as a question about wrappers: when a regulated product holds a proof-of-stake asset, how much of the staking reward reaches the end holder? Our July state of the market recorded exchange-traded products listed at a 0.14% sponsor fee with staking rewards attached, and an August pulse noted a Solana staking ETF trading over 108 million USD in a single session. Related reading sits under crypto ETFs.
What it is not
Staking is not a deposit, not insured, and not a recommendation. It is participation in a network's consensus process, with rewards and penalties set by that network's rules.