What is staking?

Staking commits assets to economically secure validation on a proof-of-stake network. Validators propose and attest to blocks under the network’s rules. They can earn rewards for performing their duties and face penalties for non-participation or violations. The conditions differ between networks.

On Ethereum, ETH is the asset validators put at risk. Simply holding ETH in an ordinary wallet does not start staking. Running a validator, joining a pool and using a custodial service involve different key controls and additional service risks.

Example

Assume an annual gross reward rate of 3% on 32 ETH solely to illustrate the calculation. Simple arithmetic gives 32 × 0.03 = 0.96 ETH in gross rewards. Operating expenses, service fees, penalties and compounding are excluded. The 3% rate is neither Ethereum’s current rate nor a fixed payment promise. Even if the ETH balance grows, a fall in ETH’s price can reduce the position’s total US dollar value.

How staking differs from lending

Staking rewards come from network validation; lending returns come from interest paid by borrowers. Products labelled “earn” or “staking” do not necessarily use the same mechanism. Check whether assets actually support validators, fund loans or enter another strategy.

Ethereum’s proof-of-stake documentation explains rewards and penalties. Under normal network conditions, penalties for being offline differ from slashing for violations such as conflicting signatures. Withdrawals depend on validator type and network queues; ending staking does not make the balance immediately spendable.

The staking methods guide compares running an Ethereum validator with joining a liquid pool through worked cost and exit examples.