How do I stake crypto safely?

What is crypto staking? Earn passive income by staking crypto safely in a self-custody wallet.

What is crypto staking?

Staking crypto allows you to earn passive income or rewards on your crypto by locking it up or pledging your address.

You can stake crypto on any network that operates on a proof-of-stake consensus mechanism.

Proof-of-stake networks use validators as an alternative to mining, so instead of solving complex mathematical problems, like on a proof-of-work network, the network is secured and transactions are validated by wallets that stake a network’s primary asset. 

After participants in the protocol, also known as stakeholders, delegate their coins, the protocol chooses a participant at random to validate the next block. Usually the more coins you stake, the higher chance that you’ll get chosen as a validator.

Slashing prevents bad behavior. If a validator acts in a way that is harmful, such as validating false transactions, they might get slashed, which means they lose some of their staked tokens.

Different staking protocols have different sets of rules, so each crypto will work a little differently. 

For example, not all networks require you to lock up your crypto. You can stake your Cardano (ADA) and Tezos (XTZ) addresses, and still send or exchange your coins. 

But no matter the rules of the protocol, by staking coins you’ll always get rewards. Rewards are paid out of the transaction fees. 

What is APY?

APY stands for annual percentage yield, and it’s the percentage of the amount you stake that you will earn per year when compounding is taken into account.

For example, if you stake 10 ATOM, and the APY is 10%, you will earn 1 ATOM per year.

Note that APY shown by wallets and staking providers is always approximate, and tends to fluctuate.

Is staking safe?

Staking from a self-custody wallet is as safe as holding funds in your wallet.

Your staked funds never leave your wallet, so you always have access to and control over your funds with your private key or secret recovery phrase.

What are the risks of staking?

There is one huge danger of staking, even from a self-custody wallet: that the price of the crypto will drop and you won’t recover the cash value of your initial investment. Historically, even cryptocurrencies that have been in the top ten have gone close to zero and never recovered.

This is the biggest risk, and why you should only invest in projects you believe in. Never risk more than you can afford to lose.

There is also a small risk that something might go wrong with a staking provider. If a staking provider goes offline, you won’t get staking rewards for that period.

However, if a staking provider were to shut down entirely, you would still have control over your funds, and you could stake them with another provider.

The risk of slashing is minimal unless you run your own node and break the network’s rules.  

Should I stake on an exchange?

There are more risks involved when you stake or earn interest on your crypto from a custodial platform like an exchange.

Historically custodial platforms have, for various reasons, been risky places to keep your crypto:

  • Mt. Gox exchange was hacked for 900,000 BTC in 2014
  • QuadrigaCX’s owner ran it like a Ponzi scheme, and lost millions by trading customer funds
  • Crypto lenders like Voyager and Celsius crumbled in 2022
  • FTX crashed and burned in late 2022, taking billions of customer funds with it
  • Countless others have gotten hacked, rugpulled, or gone bankrupt

Custodial platforms have custody over your funds, so if they shut down for any reason, your funds are usually not recoverable. 

This doesn’t mean that no custodial platform is ever safe!

Look for big players with good track records and large balances on their books. This includes exchanges like Binance. Custodial platforms that are regulated are even safer. This includes exchanges like Coinbase.

Just be aware that risks exist with custodial platforms, and plan your risk management strategy accordingly.

Where can I stake crypto safely?

You can stake crypto safely from a self-custody software or hardware wallet.

If you stake through your self-custody wallet (including a hardware wallet), and something happens to the wallet or staking platform, you’ll still have access to your funds via your secret recovery phrase or private key. 

Other than using a staking service through a wallet, advanced users also have the option of running their own node. This will look different for each protocol, and is beyond the scope of this guide. 

Self-custody staking wallets

Note that the APY is subject to change. You can find up-to-date APY in each wallet.

Exodus

CoinAPYLearn more
Solana (SOL)7%Staking Solana (SOL) FAQs
Algorand (ALGO)7.96%How do I earn ALGO rewards? 
Cosmos (ATOM)20%Staking Cosmos (ATOM) FAQs
Cardano (ADA)3.3%Staking Cardano (ADA) FAQs
Tezos (XTZ)3.89%Staking Tezos (XTZ) FAQs
Ontology (ONT) earns Gas (ONG)17%Staking Ontology (ONT) FAQs
VeChain (VET) earns VeThor (VTHO)1%Staking VeChain (VET) FAQs

Guarda

CoinAPYLearn more
Ethereum (ETH)4.06%How to stake Ethereum?
Qtum (QTUM)6%How to Stake Qtum (QTUM)?
Tron (TRX)3.26%How to Stake Tron (TRX)?
Cardano (ADA)5%How to Stake Cardano (ADA)?
Ontology (ONT) earns Gas (ONG)27.27%How to Stake Ontology (ONT)?
Zilliqa (ZIL)13.74%How to Stake Zilliqa (ZIL)?
Harmony (ONE)10.06%How and Where to Stake Harmony (ONE)?
Cosmos (ATOM)10%How to Stake Cosmos (ATOM)?
Tezos (XTZ)6%How to Stake Tezos (XTZ)?
ChangeNOW (NOW)25%How to Stake NOW Token (NOW)?
Callisto (CLO)8%How to Stake Callisto (CLO)?

Trust Wallet

CoinAPYLearn more
Osmosis (OSMO)84%How to Stake OSMO Tokens on Trust Wallet
Binance Coin (BNB)11%BNB Staking with Trust Wallet
Kava (KAVA)10%How to Stake KAVA Tokens on Trust Wallet
Algorand (ALGO)6%How to Stake Algorand
Cosmos (ATOM)7%How to Stake Cosmos (ATOM) Tokens
Tezos (XTZ)5%How to Stake Tezos (XTZ) on Trust Wallet
Tron (TRX)4.1%How to Stake TRON (TRX) on Trust Wallet