What is staking? Earn Passive Income with Crypto

Now that you understand crypto trading, let’s explore staking—a way to earn passive income with your crypto. Instead of just holding coins, you can stake them to earn rewards, similar to earning interest in a bank.

This chapter covers:

✅ What is staking?
✅ How does it work?
✅ Which cryptos can be staked?
✅ Staking rewards & risks
✅ Best staking platforms

1. What Is Staking?

Staking is the process of locking up your crypto to help secure a blockchain network. In return, you earn staking rewards, similar to earning interest in a savings account.

Staking is only available on blockchains that use the Proof-of-Stake (PoS) mechanism.

? A PoS? What's that?

Proof-of-Stake (PoS) is a way to secure blockchain networks by allowing people to "stake" or lock up their cryptocurrency as collateral. Instead of using energy-hungry mining, validators are chosen to confirm transactions based on how many tokens they have staked. The more tokens you stake, the higher your chances of being selected. In return for helping secure the network, validators earn rewards. PoS is more energy-efficient and faster than traditional mining methods.

🔹 Instead of using expensive mining (Proof-of-Work like Bitcoin), PoS networks allow users to validate transactions by staking their coins.
🔹 The more you stake, the higher your rewards.

It’s an easy way to earn passive income without trading.

2. How Does Staking Work?

Here’s how staking typically works:

Step 1: Choose a Staking Coin

Not all cryptocurrencies support staking. Popular ones include:


Ethereum (ETH)	Cardano (ADA)	Polkadot (DOT)	Solana (SOL)	Avalanche (AVAX)

Step 2: Select a Staking Method

There are 3 main ways to stake:

Method	How It Works	Best For
Exchange Staking	Stake on platforms like Binance, Kraken, or Coinbase	Beginners (easy setup)
Validator Node Staking	Run your own staking node (requires technical skills)	Advanced users
Staking Pools	Join a group that pools funds together to stake	Anyone (lower entry barrier)

💡Most beginners start with exchange staking or staking pools because they don’t require technical knowledge. When you feel more comfortable, you can move from exchange staking to a validator or staking pool, but keep in mind that the process takes some time, during which your crypto won’t be staked or earning rewards.

Step 3: Lock Up Your Coins

🔹 When you stake, your coins are locked for a period (varies by network).
🔹 Some networks allow unstaking anytime, while others require a waiting period.

Step 4: Earn Rewards

🔹 Rewards are paid in the same crypto you stake.
🔹 Typical annual returns range from 4% to 15%, depending on the coin.

3. How Much Can You Earn from Staking?

Your staking earnings depend on:

✔ The coin you stake (Ethereum, Cardano, etc.)
✔ The staking platform (some take a small fee)
✔ How long you stake (longer periods often give better rewards)

Example of Staking Rewards:

Crypto	Estimated APY (Annual % Yield)	Unstaking Period
Ethereum (ETH)	4-6%	~7 days
Cardano (ADA)	4-5%	Instant
Polkadot (DOT)	12-15%	~28 days
Solana (SOL)	6-7%	~2 days

💡Higher rewards usually mean longer lock-up periods.

4. Risks of Staking

While staking is a great way to earn passive income, there are some risks:

❌ Lock-up Periods – Some cryptos can’t be unstaked immediately, meaning you can’t sell them quickly if prices drop.
❌ Market Volatility – If the price of your staked coin drops, your earnings may be less valuable.
❌ Slashing – Some networks penalize validators for misbehaving, reducing rewards.

💡Always stake on reliable platforms and diversify your staking investments to minimize risks.

5. Best Platforms for Staking

Here are the most used platforms for staking and the ones we advice:

Platform	Level	Description	Affiliate Link
Binance	Beginner	Binance is one of the largest crypto exchanges globally, offering a wide selection of staking coins with flexible and locked staking options. It provides competitive staking rewards, a user-friendly interface, and an extensive variety of coins.	Sign up for Binance
Coinbase	Beginner	Coinbase is an easy-to-use exchange with a simple interface, making it ideal for beginners. It supports staking for a limited range of coins but has higher fees compared to other platforms. Ideal for users who want to start staking with a straightforward process.	Sign up for Coinbase
Kraken	Beginner	Kraken offers competitive rewards and flexible unstaking options for various cryptocurrencies. It’s also known for its strong security measures, making it a reliable platform for staking. Kraken provides a good balance between ease of use and staking options.	Sign up for Kraken
Ledger (Hardware Wallet)	Advanced	Ledger is a hardware wallet that allows you to stake directly from your private wallet. This option provides full control over your assets and higher security, but requires a deeper understanding of how to use and manage hardware wallets.	Buy a Ledger Wallet
Ethereum 2.0 Staking	Advanced	Ethereum 2.0 staking involves becoming a validator by staking 32 ETH. Validators participate in the network's consensus process and are rewarded for helping secure the Ethereum network. This is more technical and requires running a node, making it suitable for experienced users.	Learn more about Ethereum 2.0
Staking Pools (e.g., Rocket Pool)	Advanced	Staking pools like Rocket Pool allow users to participate in Ethereum staking with less than the 32 ETH required to become a full validator. This option allows smaller holders to pool their assets together and share rewards, making it more accessible to advanced users.	Join Rocket Pool

💡Always check platform fees before staking, as they can impact your rewards.

6. Staking vs. Yield Farming: What’s the Difference?

Some of you have probably heard about yield farming, but how does it compare to staking? Yield farming is a way to earn rewards by providing liquidity to decentralized finance (DeFi) platforms. Unlike staking, where you lock up tokens to support a blockchain network and earn fixed rewards, yield farming often involves lending or supplying assets to liquidity pools, earning variable returns based on market demand. While it can offer higher yields than staking, it also comes with greater risks, such as impermanent loss and smart contract vulnerabilities.

Feature	Staking	Yield Farming
Risk Level	Lower risk	Higher risk
How It Works	Lock coins to secure a blockchain	Provide liquidity to DeFi protocols
Rewards	Fixed APY (annual %)	Variable, sometimes much higher
Best For	Passive income seekers	DeFi users & high-risk investors

💡Staking is safer and better for beginners, while yield farming offers higher returns but comes with more risks. It is a simple way to earn passive income with crypto, offering lower risk than trading, though it may involve lock-up periods. Staking is ideal for long-term investors who believe in the project's potential.

Back to Course Next Lesson

What is staking? Earn Passive Income with Crypto

1. What Is Staking?

2. How Does Staking Work?

Step 1: Choose a Staking Coin

Step 2: Select a Staking Method

Step 3: Lock Up Your Coins

Step 4: Earn Rewards

3. How Much Can You Earn from Staking?

4. Risks of Staking

5. Best Platforms for Staking

6. Staking vs. Yield Farming: What’s the Difference?

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