Cryptocurrency Staking — what is it and how to earn?
What is cryptocurrency staking? How does Proof of Stake work, how much can you earn from staking and what are the risks — complete guide.
What is staking?
Staking is locking cryptocurrencies in a blockchain network to validate transactions and secure the network. In return, you receive rewards — similar to interest from a bank deposit, but in cryptocurrencies.
Staking works in networks based on the Proof of Stake (PoS) consensus mechanism — an alternative to energy-intensive Proof of Work (mining).
How does Proof of Stake work?
- Stakers lock tokens as collateral.
- The network randomly selects a validator to create a new block.
- The validator verifies transactions and adds the block to the chain.
- For correct work, they receive a reward (new tokens + transaction fees).
- For fraud, they lose part of their locked tokens (slashing).
How much can you earn?
| Cryptocurrency | Annual yield (APY) | Min. stake |
|---|---|---|
| Ethereum (ETH) | 3–5% | 32 ETH (solo) / any amount (liquid) |
| Solana (SOL) | 6–8% | any amount |
| Polkadot (DOT) | 10–14% | ~250 DOT |
| Cosmos (ATOM) | 15–20% | any amount |
| Cardano (ADA) | 3–5% | any amount |
Note: APY changes over time and depends on the number of stakers in the network.
Types of staking
Solo staking
You run your own validator node. Requires hardware, technical knowledge and minimum amount of tokens (e.g., 32 ETH ≈ over 300,000 PLN).
Delegated staking
You delegate tokens to an existing validator. You don't need to run hardware — the validator shares rewards (after deducting commission 5–15%).
Liquid staking
You stake through a protocol (e.g., Lido, Rocket Pool) and receive a derivative token (stETH, rETH), which you can use in DeFi. You don't lose liquidity.
Exchange staking
Binance, Kraken, Zonda offer "one-click" staking. Most convenient, but the exchange holds your keys — counterparty risk.
Staking risks
- Slashing — validator operates incorrectly → you lose part of your tokens.
- Lock-up period — tokens may be locked for weeks/months (e.g., ETH unstaking takes several days).
- Token price drop — you earn 5% APY, but token drops 50% — net result is a loss.
- Smart contract risk — in liquid staking, a bug in the contract can mean loss of funds.
- Exchange risk — staking on a centralized exchange = risk like FTX.
Staking taxes in Poland
Staking rewards are subject to taxation when sold for fiat (19%). Simply receiving rewards does not generate tax obligation. Cost basis of rewards = 0 PLN.
How can Freenance help?
Freenance tracks your staked tokens and rewards in one place — you see real returns accounting for token price changes, not just nominal APY.
Want full control over your finances?
Try Freenance for free