Staking explained simply
Many modern blockchains — including Ethereum, Solana, and Cosmos — use a system called Proof of Stake (PoS) to process transactions and keep the network secure.
Here is how it works: the network needs validators — computers that verify transactions and add new blocks to the chain. To become a validator, you must put up tokens as collateral (a "stake"). This collateral is your guarantee that you will behave honestly. If you validate correctly, you earn rewards. If you act maliciously or go offline, you can lose part of your stake.
Think of it like a security deposit. You put money down to prove you are trustworthy, and the network pays you for the service of keeping things running.
You do not need to run a validator yourself. Most people stake by delegating their tokens to an existing validator or by using a staking protocol. You earn rewards while the validator does the technical work.
How much can you earn?
Staking rewards vary by network and change over time based on participation levels and network economics. Here are typical annual percentage rates as a reference:
| Network | Token | Approximate annual reward | Notes |
|---|---|---|---|
| Ethereum | ETH | 3 - 4% | Lower rate due to high participation |
| Solana | SOL | 6 - 7% | Higher inflation, higher rewards |
| Cosmos | ATOM | 15 - 20% | High inflation offsets high reward rate |
| Polkadot | DOT | 10 - 14% | Nominated Proof of Stake model |
| Avalanche | AVAX | 8 - 10% | 14-day minimum staking period |
Important: these rates are denominated in the staked token, not in dollars. If ETH's price drops 30% while you earn 4% in staking rewards, you are still down in dollar terms. Staking rewards do not protect you from price volatility.
For a detailed explanation of how APR and APY are calculated, see DeFi Metrics.
Native staking vs. liquid staking
This is the most important distinction in staking. The method you choose affects your flexibility, your risk, and what you can do with your tokens while they are staked.
Native staking
You lock your tokens directly with the blockchain network (or a validator). The tokens are genuinely locked — you cannot use them, trade them, or access them until you unstake, which often requires a waiting period. This is the simplest and most direct form of staking.
Pros: No smart contract risk beyond the network itself. Straightforward.
Cons: Tokens are illiquid during staking. You must wait to get them back (Ethereum: several days. Some chains: weeks).
Liquid staking
You stake through a protocol like Lido or Jito and receive a receipt token (stETH, JitoSOL, mSOL) that represents your staked position. This receipt token earns staking rewards automatically and can be used elsewhere in DeFi — as collateral for a loan, in a liquidity pool, or deposited into a vault.
Pros: Capital remains liquid. You can use staked assets in other DeFi strategies simultaneously.
Cons: Adds smart contract risk (the staking protocol could have a bug). The receipt token may trade at a slight discount to the underlying asset.
Major liquid staking protocols
| Protocol | Network | Receipt token | What it does |
|---|---|---|---|
| Lido | Ethereum | stETH / wstETH | The largest liquid staking protocol by TVL |
| Rocket Pool | Ethereum | rETH | More decentralized validator set |
| Jito | Solana | JitoSOL | Liquid staking with MEV rewards |
| Marinade | Solana | mSOL | Distributes stake across validators |
| ether.fi | Ethereum | eETH / weETH | Liquid staking with native restaking |
To understand the different token types you encounter in liquid staking (rebasing vs. reward-bearing), see Token Types.
Restaking: staking your staked tokens
Restaking takes liquid staking one step further. Protocols like EigenLayer let you take tokens that are already staked (like stETH) and stake them again to secure additional networks or services. You earn extra yield on top of your base staking rewards.
The appeal is obvious: more yield from the same capital. But restaking adds additional layers of risk. You are now exposed to the security of the base network, the liquid staking protocol, and the restaking protocol. If any layer fails, your tokens could be affected.
A useful mental model: Each layer of staking is like an additional floor on a building. The higher you go, the better the view (yield), but the more you depend on the structural integrity of every floor below you.
Slashing: the downside risk
Slashing is the penalty validators face for bad behavior — going offline for extended periods, double-signing blocks, or attempting to validate fraudulent transactions. When a validator is slashed, a portion of their staked tokens (and sometimes the tokens of people who delegated to them) is destroyed.
For most stakers using reputable validators or liquid staking protocols, slashing is a low-probability event. But it is a real risk that distinguishes staking from simply holding tokens in a wallet. The protocol you choose, and the validators it delegates to, matter.
Unstaking periods
When you decide to stop staking, most networks do not return your tokens immediately. There is a waiting period — a queue designed to prevent mass exits from destabilizing the network.
- Ethereum: Typically several days, depending on the exit queue length
- Solana: Approximately 2-3 days (one epoch)
- Cosmos: 21 days
- Polkadot: 28 days
Liquid staking sidesteps this problem. Since you hold a receipt token (stETH, JitoSOL), you can sell it on a decentralized exchange at any time. You may get slightly less than the underlying value, but you get immediate liquidity.
Staking vs. lending: what is the difference?
Staking and lending both earn you passive income, but they work differently:
| Aspect | Staking | Lending |
|---|---|---|
| What you do | Lock tokens to secure a network | Deposit tokens for others to borrow |
| Where rewards come from | Network inflation / transaction fees | Interest paid by borrowers |
| Risk | Slashing, lock-up period | Smart contract risk, borrower default (rare due to over-collateralization) |
| Flexibility | Locked (native) or liquid (liquid staking) | Usually withdrawable anytime |
| Typical rates | 3 - 20% depending on network | 1 - 10% depending on token and demand |
For a broader look at lending protocols, see DeFi Explained.
How CleanSky shows staking positions
Staking positions appear differently depending on the method used. CleanSky normalizes all of them into clear categories:
- Native staking appears as "Staking rewards" or "Time-locked savings" — because your tokens are locked and earning, similar to a term deposit.
- Liquid staking tokens (stETH, JitoSOL, rETH) appear in your portfolio with their current value and accumulated rewards clearly broken out.
- Restaked positions show each layer — the base stake, the liquid staking receipt, and the restaking layer — so you can see exactly where your exposure sits.
You do not need to visit each staking protocol's dashboard. CleanSky reads the blockchain directly and surfaces all staking positions in one view.
See all your staking positions in one place. CleanSky automatically discovers your staked tokens across Ethereum, Solana, and 20+ other networks — and shows you exactly what you are earning.
Keep learning
DeFi Explained
Understand the full landscape of DeFi services, from lending to derivatives.
Token Types
Learn about liquid staking tokens, wrapped tokens, LP tokens, and how they work.
Understanding Risk
Smart contract risk, slashing risk, and other risks every staker should understand.
DeFi Metrics
How APR and APY are calculated, and what staking reward rates actually mean.