Essential Points
- Staking is locking your crypto assets on a Proof of Stake network to help validate it and receive rewards from the protocol itself in return.
- The more crypto assets you lock, the more likely you are to be chosen to validate blocks, although the exact design varies depending on the network.
- It is the way that networks like Ethereum, Cardano or Solana maintain their security without the energy expenditure of traditional mining.
- Staking isn't magic: there's volatility, unstaking periods and slashing, and no platform can promise you a fixed result.
Cryptocurrency staking involves locking up crypto assets on a network Proof of Stake to validate transactions and receive rewards in return. It is, in essence, how many decentralized networks distribute the work of maintaining a secure chain among those who already own their digital assets, without relying on the computing power required by traditional mining.
If ya has comprado Bitcoin o Ethereum If you want to understand exactly what these crypto assets do when they "work" for a network, this article is your starting point. Throughout this guide, we explain the technical mechanism of staking in Proof of Stake, how rewards are generated, and the API (Annual Percentage Yield, that is, the annualized percentage of rewards), what types of staking exist, what risks you should know before starting, and how to take the first steps wisely.
What is cryptocurrency staking and how does it work in Proof of Stake?
To understand staking, we must start with a prior problem: every blockchain needs a mechanism to decide who can add the next block of transactions and how to prevent cheating. Bitcoin solved this with PoW (Proof of Work)In traditional mining, miners compete by solving mathematical calculations using specialized hardware. Proof of Stake offers a different alternative: instead of competing with computing power, participants lock up a certain amount of crypto assets as a guarantee of good behavior.
This locking of assets is precisely what staking is. When a user stakes, their crypto assets are committed within the protocol, and this financial commitment is what the network uses to choose, in a pseudo-random way and weighted by the amount locked, who validates the next block of transactions. The more assets a validator—the node responsible for proposing and confirming blocks—has locked, the greater its probability of being selected for this task, although the exact design varies from network to network.
A system of economic security
The result is a system of economic security: if a validator attempts to confirm fraudulent transactions or behaves maliciously, the network can penalize it by reducing or removing some of the crypto assets it holds locked, a mechanism known as slashing which we will explain later. This design allows networks like Ethereum, Cardano, and Solana to process transactions without the energy consumption associated with mining, replacing competition for hardware with the alignment of economic incentives between validators and users. Bitcoin continues to use Proof-of-Work; staking, as discussed in this guide, is specific to Proof-of-Stake-based networks.
It's important to clarify that those who stake don't need to operate their own validator node to participate: they can delegate their crypto assets to an existing validator or access staking through a platform that handles the technical infrastructure. In the next section, we'll delve deeper into how this participation translates into concrete rewards.
Another relevant technical nuance is what happens to the control of private keys during staking. In non-custodial staking, the user retains control of their keys and only delegates the validation task; in staking through a centralized platform, the platform holds the crypto assets in custody for the duration of the process. Neither option is inherently better: the decision depends on the level of technical control each user wishes to maintain and how much they trust the infrastructure of the chosen platform.
Staking Types
Staking pools
They are groups of users who come together to increase their possibilities as block validators. So they unify all their funds to have greater staking power. Then, when they receive the rewards, they divide them among all the participants equivalent to the individual contribution that each one made.
This method allows small users or new users to participate in the network regardless of the amount of assets they own. Contributing to the decentralization of it.
cold staking
It is about staking from a cold wallet. Like a hardware wallet that has no permanent Internet connection. Some blockchains allow this type of staking, helping their users to keep their funds offline, and therefore much more secure.
It is ideal for those users who possess large amounts of cryptocurrencies. That without a doubt being online, they would be at great risk.
Staking Providers
This model allows many to offer a dedicated service to cryptocurrency users for staking. However, the returns with this type of staking depend heavily on the fees charged, which can range from 2% to 50% of the rewards. Therefore, it would provide a lower percentage of profits than staking solely through a platform. Examples of such platforms include... LIDO o Rocket Pool.
Advantages and disadvantages of staking
Advantages
The main advantage of this process is that it completely eliminates the need to acquire or invest in specialized mining hardware or equipment. And with it, the energy requirement that they demand. In addition, the generation of blocks through staking allows greater scalability of the network.
On the other hand, for users, keeping a large number of cryptocurrencies in stake gives them a greater probability of being chosen as validators. And thus be able to validate and verify the new blocks that are produced in the blockchain. Making better profits and much more stable than with the PoW mining process.
Likewise, cryptocurrencies that remain in stake do not devalue over time. As can happen with mining equipment if a better and more powerful one is designed.
Disadvantages
The process of buying cryptocurrencies and keeping them tucked away for rewards can be quite eye-catching. But the truth is that you cannot expect very significant gains. The platforms and exchanges pay very low annual percentages, so the rewards are very low compared to those obtained from mining blocks.
Also, keeping cryptocurrencies stored in an online wallet can pose your risks. Since a hacker could extract all your funds. In the same way, using a platform or exchange is putting your trust and funds in the hands of a third party.
As for the possession of coins, it is a factor that undermines the decentralization by which cryptocurrencies were created. Since the greater the number of assets, the greater the probability of generating blocks and making decisions. So power can be concentrated in the hands of a few. Leaving aside the most disadvantaged.
Some of the best known cryptocurrencies that operate with PoS
Here we will present you a small list of the best known cryptocurrencies that can be used to stake. Let's see.
Stellar (XLM)
This platform was designed in 2014 in order to facilitate cross-border transactions. Making them much faster and more efficient. Like Ethereum, Stellar enables the development of smart apps (dApps) and other tokens.
Ethereum (ETH)
The Ethereum cryptocurrency is one of the largest cryptocurrency projects in the cryptocurrency industry and has been the last major to enter the PoS consensus protocol. Ethereum itself is a digital platform that is based on blockchain technology. Its goal is to become a blockchain capable of running decentralized applications.
TRON (TRX)
TRON It was designed to improve network scalability and reliability, enabling it to process transactions at high speeds through high-performance computing. TRX is among the most profitable staking options.
NEO (GAS)
NEO is a platform very similar to Ethereum whose purpose is the development of smart contracts. Its technology is of Chinese origin and promises to generate GAS (the token) automatically without the need for an Internet connection. Currently it is an excellent option for staking.
Algorand (ALGO)
Algorand is a platform that uses Proof-of-Stake (PoS) to improve network decentralization, security, and scalability. Its ALGO token can be purchased on various exchanges such as Bit2Mewhich allows you to stake it.
How are staking rewards (APY) generated and calculated?
Staking rewards don't appear out of thin air: each network defines in its protocol how many new crypto assets it issues (or what portion of transaction fees it redistributes) among those who participate in validation, and this distribution is what the user receives as a reward for keeping their assets locked and contributing to the network's security. The usual way to express this reward is the APY, short for Annual Percentage Yield, which estimates what proportion of additional rewards a given amount of locked crypto assets could accumulate over a year.
The APY of a staking network is not a fixed or guaranteed number: it depends on variables that change over time, such as the total amount of crypto assets locked on the network, the issuance protocol of each blockchain, the volume of fees distributed among validators, and, in some cases, whether staking is accessed directly or through a platform that charges its own service fee. The more participants lock their assets on a network, the more the APY per unit locked tends to be distributed among more people, which can moderate the individual percentage. Therefore, any APY figure should be understood as a variable estimate, never as a guaranteed outcome.
It's important to distinguish staking rewards from traditional banking products: while the return on a bank deposit stems from a loan agreement between the bank and the customer, staking rewards originate from the blockchain protocol itself as an incentive for contributing to its operation and security. Furthermore, these rewards are typically paid out in the same locked cryptocurrency, meaning their value in euros fluctuates with the market price of that asset. An APY of X% in ETH, for example, doesn't guarantee any return in euros if the price of ETH changes during that period.
Many networks and platforms also allow for the automatic reinvestment of previously earned rewards, adding them to the locked amount so they also participate in the next distribution round. This mechanism, known as compounding or restaking, can accelerate the accumulation of new rewards over time, although it does not change the variable nature of the APY or eliminate the risks described in the following section. Each network defines its own rules regarding whether compounding is automatic, manual, or nonexistent.
On platforms like Bit2MeThe Earn section centralizes access to staking various cryptocurrencies without requiring users to set up their own validator node infrastructure. To see at a glance which cryptocurrencies currently offer staking, you can go to Bit2Me Earn and review the current conditions of each one before deciding. In upcoming guides Bit2Me Academy We will delve specifically into how APY is calculated in staking, with examples of the variables that drive it.
Risks and considerations before staking
Staking is not a risk-free activity, and understanding this clearly is just as important as understanding how it works. The first and most obvious risk is the volatility of the underlying cryptocurrency: locking up an asset does not protect it from market price fluctuations, so its value in euros can fall regardless of the rewards accumulated.
The second risk relates to the availability of funds. Many networks impose a lock-up period or an unstaking process that can take anywhere from a few hours to several days before crypto assets become available for sale or transfer again. During this period, the user cannot react to market movements even if they wanted to, which is something to keep in mind before locking up an amount that might be needed in the short term.
The third risk is slashing: a penalty mechanism that some Proof of Stake networks apply to validators that act incorrectly or maliciously, whether due to technical errors, prolonged downtime, or attempted fraud. If a user has delegated their crypto assets to a validator that is slashed, they can lose a portion of those locked assets, which is why choosing a validator or platform with a good track record is a crucial decision. Added to this is the protocol risk when using liquid staking, since the derived token depends on the proper functioning of the smart contract that issues it.
There is also a custody risk when staking is done through a platform: the locked crypto assets depend on the solvency and operational security of that platform, which is different from a bank account with deposit guarantee funds. Therefore, it's advisable to check what security measures and regulatory framework support the chosen platform before locking any significant amount.
Bit2Me Academy It will dedicate a specific guide to the most common mistakes when staking, as well as comparing staking and holding—keeping crypto assets without locking them up—for those wondering which of the two options best suits their way of managing their digital assets. Past performance of any staking network or platform does not guarantee future results, and no provider can promise a fixed return in a constantly changing market environment.
Regulatory framework: MiCA and staking in the European Union
Within the regulatory framework of the European Union, the regulation MiCA (Markets in Crypto-Assets)The regulation, in force since 2024, establishes the authorization and supervision regime for crypto-asset service providers operating in the European market, including those offering access to staking mechanisms. This means that, within the EU, platforms that facilitate staking for their users must comply with the transparency, custody, and risk management requirements defined by this regulation.
A platform's compliance with MiCA does not eliminate the inherent risks of staking described in the previous section, but it does provide an oversight framework that was previously lacking in much of the industry. Before locking crypto assets on any platform, it is advisable to verify whether it operates under this regulatory framework and what information it provides to users regarding fees, risks, and terms of service.
MiCA also requires platforms to clearly communicate the nature of the rewards they offer, avoiding language that could be confused with banking or investment products regulated under other frameworks. This transparency requirement directly benefits users, who can compare conditions across platforms with consistent information instead of relying on verbal promises or aggressive marketing.
FAQ – What is Staking?
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