On a proof-of-stake blockchain, validators post tokens as collateral for the right to propose and confirm blocks. Honest work earns newly issued tokens and transaction fees; provably dishonest behaviour or prolonged downtime can have part of the stake destroyed. Holders who do not run a validator can delegate their tokens to one and take a share of the same reward.
The considerations are lock-up and denomination. Many networks impose a waiting period before staked tokens can be withdrawn, during which the position cannot be exited at any price, and the reward is paid in the network's own token — so a yield of 5% means nothing if the token falls further than that. Liquid staking issues a tradable receipt token to work around the lock-up, adding a layer of smart contract risk in return.
Is staking the same as earning interest?
No. Interest is paid by a borrower; staking rewards are newly issued tokens paid by the protocol for securing it. The stake can also be slashed for validator misbehaviour, which has no lending equivalent.
Last updated October 17, 2026