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How to stake crypto?

How to stake crypto?

August 2, 2022
3
 min read

You can earn yield by staking your cryptocurrencies to validate blockchain transactions. Let's explore why you should stake crypto and how.

By Mika, Peter

You can earn yield by staking your cryptocurrencies to validate blockchain transactions.

Why stake crypto?

Staking means locking up your crypto to help validate transactions for proof of stake blockchains in exchange for rewards (typically, more crypto of the same type). Read our blockchain guide for a refresher on how proof of stake works.

Staking your crypto on a blockchain is a relatively low-risk way to earn yield. Depending on the crypto you stake, you can earn 5-13% APY.

What crypto can be staked?

Cryptocurrencies that use proof of stake have a market cap of $597B with an average yield of 6.5% APY (source: State of Staking). 

Top proof of stake blockchains by market cap include:

  1. Ethereum 2.0: 4.1% yield in Q2 2022
  2. Solana: 4.8% yield
  3. Cardano: 5%
  4. Polkadot: 13.9% yield
  5. Avalanche: 8.7% yield

When selecting a cryptocurrency to stake, consider one with both high yield and market cap (see stakingrewards.com). Since you have to buy the crypto to stake it, you should believe in the token’s long-term potential. Be very careful staking tokens that you’re not familiar with!

How to stake crypto?

Let’s walk through how you can stake crypto, using Ethereum and Solana as examples.

How to stake ethereum

There are two ways to stake Ethereum:

  1. If you have 32 ETH, you can stake by becoming an official Ethereum validator.
  2. You can participate in a staking pool for much less ETH through a centralized exchange like Coinbase (Be aware, you will not be able to unstake until after the Ethereum 2.0 merge occurs) or a DeFi protocol like Lido.

How to stake Solana

Similar to Ethereum, you can stake Solana by:

  1. Becoming an official Solana validator.
  2. Using a wallet like Phantom.

Probably the easiest way to stake Solana is to use Phantom:

  1. Buy some Solana on an exchange 
  2. Send it to your Phantom wallet’s public address
  3. In your Phantom wallet, tap "Your Staking Rewards" and choose a validator

Staking cryptocurrencies like ethereum is probably the simplest way to start earning yield. But there’s another set of cryptocurrencies that offer high yields without price volatility. We’ll cover stablecoins next.

Up next: What are stablecoins?

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