So, you've finally grasped the basics of crypto—now everyone's talking about staking. No, it’s not vampire-related (sorry, no dinner reservations either). Staking is the powerhouse behind blockchain networks like Solana and Ethereum, and yes, it can earn you rewards while you sleep.
But like all things crypto, staking comes with its own maze of risks, rewards, and acronyms you didn’t ask for. Don’t worry—this guide breaks it all down, from native staking to liquid staking.
What Is Staking in Crypto?
Blockchains like Solana and Ethereum use a Proof of Stake (PoS) consensus mechanism, managed by validators that verify and secure transactions.
Stakers lock up SOL or ETH as collateral with validators to support the network—this process is called staking. In return, they earn passive yield and additional tokens as rewards.
How Does Native Staking Work?
Native staking involves locking tokens directly with validators. Rewards vary based on:
- Staking duration
- Amount staked
Methods to Stake Natively:
- Solo Staking: Run your own validator (requires technical skills and significant capital).
- Delegated Staking: Delegate tokens to existing validators; they handle the tech, you share rewards.
- Staking-as-a-Service: Use third-party platforms (for a fee) to manage staking.
👉 Learn how staking boosts blockchain security
Risks of Native Staking
| Risk | Description |
|------|------------|
| Market Volatility | Token value fluctuations may offset rewards. |
| Lock-Up Periods | Staked tokens are illiquid during the lock period. |
| Slashing Penalties | Validators may lose tokens for misconduct. |
| Custodial Risks | Third-party services may pose security threats. |
How Does Liquid Staking Work?
Liquid staking solves native staking’s liquidity problem. Instead of locking tokens with a validator:
- Stake SOL/ETH in a smart contract.
- Receive Liquid Staking Tokens (LSTs), which can be traded or used in DeFi—while still earning rewards.
Popular LSTs:
- Solana: PSOL (Phantom), JitoSOL, mSOL (Marinade)
- Ethereum: stETH (Lido), rETH (Rocket Pool)
Risks of Liquid Staking
- Smart Contract Vulnerabilities: Bugs could lead to fund loss.
- Validator Risks: Malicious validators may slash your stake.
- Regulatory Uncertainty: Changing laws might impact liquid staking platforms.
Staking on Solana vs. Ethereum
Solana
- Native Staking: Directly with validators (supermajority/superminority).
- Liquid Staking: Convert SOL to LSTs (e.g., PSOL).
Ethereum
- No Direct Staking: Validators require 32 ETH (fixed).
- Liquid Staking Dominance: Lido (~37% market share), Coinbase, Binance.
👉 Compare top staking platforms
How to Stake with Phantom
Solana (Native/Liquid)
- Open Phantom → SOL tab → Start Earning SOL.
- Pick Native (choose validator) or Liquid (get PSOL).
Ethereum (Liquid)
- Use third-party apps (e.g., Ether.fi).
FAQ
Q: Can I unstake anytime?
A: For native staking, lock-up periods apply. Liquid staking allows instant trading via LSTs.
Q: What’s the minimum stake amount?
A: Varies by network (e.g., Solana: no minimum; Ethereum: 32 ETH for solo staking).
Q: Are staking rewards taxable?
A: Yes, in most jurisdictions—consult a tax professional.
Getting Started with Phantom
- Download Phantom (browser/mobile).
- Secure your recovery phrase (never share it!).
- Fund your wallet via Apple/Google Pay.
Disclaimer: This guide is educational only—not financial advice. Always DYOR.
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