What is Staking in Cryptocurrency?

The complete guide to earning passive income through crypto staking

Understanding Cryptocurrency Staking

Staking is the process of actively participating in transaction validation on a proof-of-stake (PoS) blockchain.

By locking up your cryptocurrency holdings in a wallet, you help secure the network and in return earn staking rewards - similar to earning interest in a savings account.

Popular staking coins include Ethereum (ETH), Cardano (ADA), Solana (SOL), Polkadot (DOT), and many others that use PoS consensus mechanisms.

Cryptocurrency Staking Illustration

How Cryptocurrency Staking Works

1. Acquire Coins

Purchase proof-of-stake cryptocurrencies from exchanges that support staking.

2. Transfer to Wallet

Move your coins to a compatible wallet that supports staking functionality.

3. Stake & Earn

Delegate or lock your coins to start earning staking rewards automatically.

Key Benefits of Crypto Staking

Passive Income

Earn regular rewards (typically 5-20% APY) on your crypto holdings without active trading.

Energy Efficient

PoS uses ~99% less energy than proof-of-work mining like Bitcoin.

Network Security

Your staked coins help secure the blockchain against attacks.

Price Support

Staking reduces circulating supply, potentially supporting coin value.

Staking vs Mining

Staking Mining
Consensus Proof-of-Stake (PoS) Proof-of-Work (PoW)
Energy Use Low Very High
Hardware None required Expensive ASICs/GPUs
Rewards 5-20% APY Varies by hash rate
Examples ETH, ADA, SOL BTC, LTC, DOGE

$315 Billion

Total value locked in staking (2023)

12.5% Average

Annual staking yield across top PoS coins

64% of ETH

Percentage of Ethereum supply currently staked

Popular Crypto Staking Keywords

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