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A Beginner's Guide to Staking: What It Is and How to Earn the Yield

  • Writer: Bitcoin.blog Team
    Bitcoin.blog Team
  • Dec 3
  • 3 min read



Real Yield. Cryptocurrency staking has evolved from a speculative endeavor to a fundamental component of any serious digital asset portfolio.

If you are holding ETH or SOL in a cold wallet without staking it, you are not only exercising caution but also diminishing your potential profit. Institutional adoption is underway, and the landscape has shifted. Here is a guide to navigating the staking ecosystem.


The Technicals


Let’s simplify the concept. You don’t need to understand code compilation to grasp the source of the revenue.

Proof-of-Stake (PoS) operates as a digital security deposit system. Consider a nightclub scenario: the bouncers (Validators) must provide a substantial cash deposit to work there. If they effectively verify transactions, they are compensated. If they allow bad actors or neglect their duties, their deposit is forfeited. This is known as Slashing.

Most individuals lack the necessary hardware or capital (32 ETH) to become validators. Instead, we act as Delegators, lending our crypto to validators to enhance their deposit size, and in return, we receive a portion of their earnings.

Where does the yield come from in 2025? It is no longer "magic internet money." It is derived from two sustainable sources:

  1. Issuance: The network generates new coins to fund security (Inflation).

  2. Execution Rewards: Although the "base fee" of each Ethereum transaction is burned, validators receive the priority fees (tips) and MEV (Maximal Extractable Value). During periods of high network activity, these tips significantly enhance the APR.


Staking strategy


The market has divided into three distinct categories. Your choice depends entirely on your risk tolerance and desired level of involvement.


CEX Staking


  • Venues: Coinbase, Binance, Kraken, Bybit

  • The Deal: You select "Earn," and they manage the technical aspects.

  • Pros: Simplified user experience; streamlined tax reporting.

  • Cons: Fees. They typically take a 15-25% share of your rewards for operating a server.


Liquid staking


  • Venues: Lido (stETH), Rocket Pool (rETH), Jito (JitoSOL).

  • The Deal: You stake and receive a "receipt token" that automatically appreciates to reflect your rewards.

  • Pros: Capital Efficiency. You earn ~3-4% on ETH (varies with network usage), while still utilizing the receipt token in DeFi.

  • Cons: Smart contract risk. A protocol bug could cause your receipt token to de-peg.


Restaking


  • Venues: EigenLayer, Symbiotic.

  • The Deal: Restake your staked ETH to secure additional networks.


    This option offers the highest potential yields (sometimes reaching 8-10% with active incentives) but also compounds risk. If any of the secured services fail, financial loss occurs.


Where to Find the Highest Reward?

Avoid guessing. Platforms adjust their rates weekly based on network congestion and validator saturation.

Before committing your coins, use these tools to access real-time data:

  • StakingRewards.com: The industry standard for comparing annualized rates across various assets and providers.

  • DefiLlama: The premier tool for assessing "Real Yield" in DeFi protocols if pursuing Liquid Staking.

Current Market Snapshot: Currently, on-chain staking via Solana protocols (such as Jito or Marinade) often surpasses centralized exchanges after fees. Always review dashboards before making commitments.


ETFs vs. Staking ETPs


In 2024, the "Spot ETF" movement democratized crypto access. However, a limitation exists: most major US ETFs are legally barred from staking. They capture price action but forego yield.

As of late 2025, the market has bifurcated into two categories. Understand your purchase:

1. Price-Only ETFs (Maximum Liquidity, No Yield)

Ideal for trading volatility but inefficient for long-term holding as staking rewards are missed.

  • ETHA (BlackRock) / FETH (Fidelity) / ETHW (Bitwise): These are pure "spot" products. They hold ETH but do not stake it due to US regulatory constraints. You receive price exposure minus the management fee.


2. Staking-Enabled Wrappers ETPs

These funds capture rewards, often reinvesting them into the fund (Total Return).

  • Europe / Global ETPs: Products like VSOL (VanEck Solana ETP) or ASOL (21Shares Solana Staking ETP) explicitly delegate their SOL holdings. The staking rewards are automatically compounded, enhancing the NAV.

  • US Active Strategies: Seek specialized funds (such as REX/Osprey structures) that combine spot exposure with specific strategies to generate yield, as standard spot ETFs still cannot stake.

For yield, a standard US Spot ETF is insufficient. You need either a specific "Staking ETP" (primarily available in Europe/Global markets) or to hold the asset on-chain yourself.


The Risks involved


Many mistakenly treat staking as a savings account. It is not. Specific risks exist here that are absent in traditional finance.

  1. The Liquidity Trap (Lock-up Periods): This is detrimental to panic sellers. If the market plummets 20% in an hour, you cannot immediately liquidate your staked assets.

    • Solana: Unstaking requires ~2 days (one epoch).

    • Ethereum: You join an exit queue. If mass exits occur, the queue can extend to days.

  2. Slashing: Although rare now, delegating to a malicious validator attacking the network results in a partial principal loss. Solution: Diversify across multiple validators or use a Liquid Staking pool.

  3. Smart Contract Risk: Past incidents remind us that even audited code can have vulnerabilities. Utilizing Liquid Staking entrusts your savings to the code.



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