How crypto staking actually works

Staking means locking coins to help secure a proof-of-stake network, which pays you for doing it. That much is simple. What is not simple is that the network pays one rate, nobody advertises it, and every product you can buy is that rate minus a cut you usually have to derive yourself.

Ethereum currently pays about 2.473% gross. We had to work that out from Lido's published formula against its live API, because no platform states it — every product quotes its own net figure, and without the gross number you cannot see what is being taken.

Solana's gross rate is around 6.11%. Same principle: the network's rate is the ceiling, and every arrangement below it is a subtraction.

Two sources: newly issued coins, and a share of transaction fees. Both are paid by the network to validators who propose and attest blocks correctly.

This matters because it means staking yield is not free money and not a business return. It is partly dilution — the network issuing new supply — which is why a headline percentage on a network with high issuance is worth less than it looks.

Run your own validator

32 ETH and a machine that stays online. You keep the full 2.473% and pay no commission to anyone. You also carry every operational risk yourself: downtime penalties, and slashing if your setup does something the protocol punishes.

Stake through a custodian

An exchange stakes on your behalf. Simple, no minimum, and the most expensive. Coinbase pays retail about 1.75% against the network's 2.473% — an implied take of roughly 29%, published nowhere. Kraken's own support page states that in-app APYs "do not include Kraken's commission", which is honest and still means the number you see is not the number you get.

Liquid staking

Deposit coins, receive a token representing the staked position, keep the ability to trade or use it elsewhere. Lido charges 10% of yield and — to its credit — its advertised APR is already net of that fee, with the formula in its documentation and the same number returned by its public API.

The catch in this category is not fees. It is depth: see is liquid staking actually liquid.

• Slashing. The protocol destroys part of a stake for provable misbehaviour. Rare, and whose capital absorbs it varies by arrangement.
• Unbonding time. Exiting is not instant. During a queue you hold an asset you cannot sell and cannot use.
• Counterparty. A custodian holds the keys. A liquid staking protocol holds them in a contract. Both are claims rather than possession.
• Depth, for liquid staking tokens. A token that is fully backed and has no buyers is not liquid, and that has been the expensive failure in this category rather than fees.

At around 2.2% net, the staking decision is roughly a hundredth as important as the decision to hold the asset at all. The spread between the better platforms is tens of basis points.

So the useful question is not which platform pays most. It is which one you would rather have holding the keys — and whether the yield justifies the counterparty at all. Our staking platforms rating is built around that framing.

The network pays 2.473%. Every product is that number minus somebody's cut, and the largest custodians disclose their cut the least clearly.

Find the network's gross rate, then work out what your provider keeps. Solo staking keeps all of it and demands competence; custodians take between 8% and 29% and mostly do not say; liquid staking sits in between and adds a depth risk that has cost more money than any fee. At these rates, prioritise who holds the keys over who quotes the highest number.