What Is Crypto Staking? Beginner Guide to Earning Rewards

Crypto staking is a way to use crypto holdings to generate rewards while helping to validate transactions. While “staking” may be a relatively new addition to the financial lexicon, it’s important for those interested in crypto to understand what it is, how it works, and what cryptocurrencies it can be used to obtain.

Crypto staking may feel like it’s a step beyond simply learning how to buy cryptocurrencies or how a crypto exchange works, but learning about cryptocurrency staking can broaden your knowledge of the crypto ecosystem, making you more informed about your options.

What Does Crypto Staking Mean?

Crypto staking is the process of “locking up” crypto holdings on a blockchain network in order to try and obtain rewards. There may be time limits or requirements depending on the specific blockchain network, and rewards can vary significantly, but are typically a percentage of the coins staked.

How Does Crypto Staking Work?

Cryptocurrencies are built with blockchain technology, in which crypto transactions are verified, and the resulting data is stored on the blockchain. Depending on the types of cryptocurrency you’re working with and its supporting technologies, these validation processes may involve staking, using a “proof-of-stake” consensus mechanism, or mining, using a “proof-of-work” consensus mechanism. Each of these processes help crypto networks achieve consensus, or confirmation that all of the transaction data adds up to what it should.

By staking crypto, participants are locking up their crypto on the blockchain to provide resources and liquidity. In exchange, they can earn rewards, often in the form of additional crypto tokens.

SoFi Earn: 4.40% APY, FDIC protection, and 24/7 on-chain access.

What Is Proof of Stake (PoS)?

Achieving consensus and validating information on a blockchain requires participants. That’s what staking is: individuals who actively hold onto, or lock up their crypto holdings in their crypto wallet, may participate in these networks’ consensus-taking processes. Stakers are, in essence, approving and verifying transactions on the blockchain.

For doing so, the networks reward those individuals. The specific rewards will depend on the network.

It may be helpful to think of crypto staking as similar to depositing cash in a savings account. The depositor earns interest on their money while it’s in the bank, as a reward from the bank, who uses the money for other purposes (lending, etc.). Staking coins is, from that perspective, similar to earning interest. Although cryptocurrency holdings could potentially lose value as the market ebbs and flows, too.

Crypto Staking vs Crypto Mining

Staking crypto generates rewards and helps a crypto network validate information on the blockchain, using the cryptocurrency stakers locked up on the network. Crypto mining has the same goal, but the consensus needed to verify transactions is achieved in a different way.^[2]

Effectively, mining involves using computing power to solve mathematical problems and equations to open up new blocks on a blockchain, for which miners are then rewarded. Mining requires significantly more computing power and resources, but effectively, both staking and mining are trying to achieve the same ends of validating information and producing new “blocks.”

How Much Can You Earn From Staking Crypto?

It’s difficult to say how much someone could earn from staking crypto, as it will ultimately depend on several factors: The cryptocurrency they’re staking, the rewards rate it provides (referred to as APY, or annual percentage yield), as well as the total volume of cryptocurrency staked.

Other factors that may influence the amount earned from staking crypto can include the terms of the lock-up period, the market volatility of the cryptocurrency staked, and any commission fees involved.

To get a better idea of the potential rewards, it can be a good idea to check out the current staking APY rates for a given cryptocurrency. You may also be able to use specific platforms to stake, which may pay out different rates, too.

How to Stake Crypto Step by Step

Crypto staking is typically a passive activity, unless you actively run a blockchain validator node. When someone stakes their holdings (typically by locking them in a wallet through a crypto staking platform), the network can use those holdings to forge new blocks on the blockchain.

The more crypto you’re staking, the better the odds are that your holdings will be selected to validate information and new blocks, and a lot of that depends on the specific blockchain network you’re staking on.

Essentially, during a transaction, information is “written” into the new block, and the staker’s holdings are used to validate it. Since coins already have “baked in” data from the blockchain, they can be used as validators. Then, for allowing those holdings to be used as validators, the network rewards the staker.

Step 1: Choose a Staking Coin

To begin staking cryptocurrency independently, a user would have to decide which coin they want to stake and buy their cryptocurrency of choice.

Ethereum (ETH), for example, requires a minimum of 32 ETH (worth about $123,000 at the time of writing) for users to begin staking.^[3]

Step 2: Choose a Crypto Platform or Wallet

You may be able to stake crypto through an exchange network, through a staking service, or directly on the blockchain network of the cryptocurrency.

Step 3: Set Up Crypto Storage

Typically, after choosing a platform, you would then download a crypto wallet in which to store your coins for staking. That may mean going directly to the specific crypto’s main website and downloading its corresponding wallet.

To stake crypto, users need a constant, uninterrupted internet connection. A standard dedicated desktop computer will likely do the job, although a Raspberry Pi might save on electrical costs.

Step 4: Deposit Your Crypto

Once the hardware has been selected and the crypto wallet software downloaded, a user can begin staking cryptocurrency.

For those holding the appropriate crypto in an exchange-hosted crypto wallet, the exchange typically handles all the staking on the backend.

Depending on the specific crypto, wallet, or exchange network, that may be all the action a person needs to take. But it’s a good idea to double-check to see if additional steps need to be taken.

Different Ways to Stake Crypto

There are also a few different ways to stake crypto.

Staking Crypto on an Exchange

Perhaps one of the simplest ways to stake crypto is to do so through your given exchange. Many crypto exchanges give people the option to stake, and in those cases, depending on the exchange, they may simply need to select the option to stake, lock up their holdings, and let the rewards generate.

Joining a Staking Pool

Aside from an exchange, stakers may be able to delegate their crypto holdings to pools, which will allow them to generate rewards, too. This can’t be done for every cryptocurrency, but for those that do have delegated staking and pooling built into their networks, it can be a way to stake directly to a validator or delegate.

Solo Staking on Your Own Node

If you’re really feeling up for it and want to get more deeply involved on a specific blockchain network, you could look at running your own validator node, also referred to as solo staking. Note, however, that doing so likely requires some significant background knowledge, and there’s the potential of making mistakes. It could also require some hardware that could cost hundreds or thousands of dollars.

Pros and Cons of Crypto Staking

There are some pros and cons to staking crypto.

The Benefits of Staking

Here are a few of the potential benefits of staking:

•   Less energy-intensive. PoS networks use less energy than PoW platforms. Each mining machine requires a constant supply of electricity and consumes much more power than a regular computer. But it’s possible to run validator nodes on an average computer, eating up fewer resources, to power your staking activity

•   Easier to earn rewards. Crypto staking and mining rewards can be very different. Almost anyone can stake a small amount of crypto on a crypto exchange and earn some kind of yield. To become a miner, however, often requires a much bigger commitment. First, you’d need to acquire the proper computer, which can be costly; then you’d need to learn to use it, which can be time-consuming.

•   No special equipment required. Anyone can become a validator using a regular computer, assuming they have enough money and can keep the node running constantly. By contrast, mining requires specialized hardware.

The Risks of Staking

Conversely, there are some risks involved with staking that individuals should know about.

•   Different security measures. PoS is relatively new compared to PoW. It’s not necessarily unsafe, but it’s also not inherently more secure than PoW, either. There are different security measures in place, and a lot of that depends on the specific network as well.

•   Potential for takeover. Crypto blockchain networks may be controlled by those who hold the majority (or 51%) of tokens. While attacking a PoW network would involve acquiring large amounts of computing power, in many cases, attacking a PoS network could only require funding (again, depending on the specific network). Smaller blockchain networks are generally more vulnerable to a PoS “51% attack,” where attackers may try to manipulate transactions to their own advantage. However, PoS networks may also provide some inherent protection against these attacks. For example, attackers attempting such an attack risk losing the entire amount that’s staked.

•   Increased centralization. The creator(s) of blockchain technology intended for blockchains to be decentralized. But in some cases, PoS networks can wind up becoming more centralized because becoming a validator can be more expensive than becoming a miner. Ethereum (ETH), for example, changed from PoW to PoS. To become an ETH validator would require 32 ETH (or around $86,500 as of September 2026). Many centralized exchanges have chosen to become validators of PoS coins to share staking rewards with their customers.

Popular Crypto Staking Coins in 2026

Just a few years ago, the entire concept of proof-of-stake consensus was still relatively new, and options for staking coins were few and far between. But a growing number of projects are utilizing PoS and some exchanges are making it easier than ever for users to passively earn crypto by staking their coins.

With that in mind, the list of potential cryptos to stake, and the ones offering the highest potential yields, is always changing. But here are some of the cryptos out there that are viewed as more established.

•   Ethereum (ETH): Ethereum (ETH) is one of the most popular cryptocurrencies on the market — although it is not exactly a cryptocurrency itself. Staking Ethereum on your own will require a minimum of 32 ETH. Rewards vary, too.

•   EOS (EOS): EOS is similar to Ethereum in that it’s used to support decentralized blockchain systems and projects. EOS tokens are native to the EOS blockchain, and like other cryptos, can be staked to earn rewards.

•   Tezos (XTZ): Like EOS and Ethereum, Tezos (XTZ) is an open-source blockchain network with its own native currency, with a symbol of XTZ. And it, too, can be staked on certain platforms and networks.

•   Polkadot (DOT): Polkadot is a newer cryptocurrency, created in August 2020. Polkadot is both a cryptocurrency and a protocol designed to support “parachains,” which allow different blockchains created by different developers to share information securely.

•   Avalanche (AVAX): Avalanche was created in 2020, and is one of the highest yield-producing cryptos out there for staking.

It’s important to research your options to understand whether staking a certain cryptocurrency would be right for you. Also be aware, as mentioned earlier, that SoFi does not currently offer staking services. While members will soon be able to buy, sell, and hold certain cryptocurrencies, such as Ethereum, other cryptocurrencies listed above may not be offered.

New Staking Guidelines and Crypto Rules

In 2026, federal agencies including the CFTC and SEC issued new guidance on crypto classification. As it relates to crypto staking, the agencies laid out that certain activities like staking do not amount to securities transactions, and that includes various types of staking (solo staking, etc.). While the guidance helps clarify for exchanges, brokers, and custodians which crypto assets or activities may or may not be identified as a security, it, in effect, changes little for those who may be actively staking.

Crypto Staking Taxes and Risks

Anyone can earn crypto by staking cryptocurrency. But unless someone is sitting on a huge stash of proof-of-stake coins, they’re not likely to get rich from staking.

Staking rewards, as mentioned above, are in some ways similar to earning interest on funds held in a savings account. Both are a form of passive income (with the possible exception of solo staking). They don’t require a user to do anything other than holding the right assets in the right place for a given length of time. The longer a user stakes their coins, the greater potential for generating bigger rewards.

But unlike savings accounts, there are a few variables particular to proof-of-stake coins that influence how much of a staking reward users are likely to receive. Users may do well to research these factors and more when searching for staking coins that may have the most potential to be profitable:

•   Potential reward size

•   The size of the staking pool

•   The size of holdings locked, or required to stake

Additionally, the fiat currency value of the coin being staked must also be taken into account. Assuming this value remains steady or rises, staking could potentially be profitable. But if the price of the coin falls, profits could diminish quickly.

What Happens if Staking Coin Values Drop?

In the event that your staked coins see a drop in value, you still own them, your overall portfolio just subsequently takes a hit and falls accordingly. It could recover if the value of the staked coins appreciates, and the coins should continue to generate rewards through the staking process.

Is Staking Crypto Taxed as Income?

If you earn rewards from staking, then it is generally reported as income on a taxpayer’s tax return. There’s also a section on the tax return that asks specifically if the taxpayer has received digital assets as a result of staking. If an individual holds the cryptocurrency and later sells it, however, the result must be reported as a capital gain or loss, since the IRS treats cryptocurrency as property rather than legal tender, similar to gold or property.

The Takeaway

Staking is a way to use your crypto holdings or coins to earn additional rewards. It can be helpful to think of it as along the lines of funds generating interest in a savings account over time.

Essentially, coin holders allow their crypto to be used as a part of the blockchain validation process, and are rewarded by the network for the use of their assets. While there are risks to be aware of, such as the value of the cryptocurrency itself falling, staking may open up another potential avenue for generating returns.

SoFi Crypto is back. SoFi members can now buy, sell, and hold cryptocurrencies on a platform with the safeguards of a bank. Access 40+ cryptocurrencies, such as Bitcoin, Ethereum, and Solana, with the first national chartered bank to offer crypto trading. Now you can manage your banking, investing, borrowing, and crypto all in one place, giving you more control over your money.

FAQ

How much money do you need to stake crypto?

There is no set or predetermined amount of money someone needs in order to stake crypto, but they would need enough to buy crypto coins or assets with which to stake. It is possible to start with as little as $1, potentially, depending on the cryptocurrency.

How do I calculate my staking rewards?

In simple terms, it’s possible to calculate potential staking rewards by multiplying the staked coin amount by the rewards percentage, or annual percentage rate. There are also staking calculators online that can help people get an estimate.

Can you lose crypto by staking it?

It’s possible to lose crypto by staking it, as platform breaches and validator penalties or slashing could enter the fray. It’s also possible that a staked coin or asset’s value falls to zero while it’s locked up, in which it would be effectively lost.

What is the difference between staking and locking crypto?

Staking crypto refers to the act of pledging a digital asset to a blockchain to provide liquidity and resources, in exchange for rewards. Locking crypto means that withdrawals of certain cryptos have been restricted for a period of time. They can be related, but they’re two different things.

What is the difference between crypto staking and validation?

Validation occurs on a crypto network or blockchain, effectively checking for the correct information and data. Staking is when individuals pledge their coins to the chain to provide resources for liquidity and validation. Someone who stakes their coins could also be called a validator.

Is crypto staking considered a safe way to earn passive income?

There is no “safe” way to earn passive income, and crypto staking is no different. In addition, cryptocurrencies are often considered higher risk than other types of financial activities. However, while there are risks associated with crypto staking, it may be less risky than other crypto passive income activities.

Photo credit: iStock/FreshSplash

SOCRYP-Q326-007