How Does Crypto Staking Work in 2025?

2022-11-21, 09:32

Explore the evolution of crypto staking in 2025, where higher yields of 7-12% APY, liquid staking dominance, and advanced security mechanisms have transformed the landscape. With Ethereum leading at 31M ETH staked and Solana’s 72% participation rate, multi-chain platforms now offer simplified, one-click diversification. Staking remains a compelling alternative to mining or purchasing crypto, providing accessible passive income opportunities for all participants through platforms like Gate, which offer institutional-grade security and competitive rates without minimum deposits.

Staking in 2025: Latest Developments

As of 2025, crypto staking has evolved significantly. The landscape now features:

Higher average yields (7-12% APY) across major PoS networks
Liquid staking dominates with 65% market share - Advanced slashing protection mechanisms reducing risk exposure
Enhanced validator decentralization protocols

Ethereum leads with 31M ETH staked, followed by Solana’s 72% participation rate. Multi-chain staking platforms offer simplified user experiences with one-click diversification across networks.

For optimal returns, platforms like Gate provide institutional-grade security and competitive rates without minimum deposit requirements, making staking accessible to all participants in the ecosystem.

If you are interested in cryptocurrencies, you must have come across the concept of staking. Staking is an alternative to mining crypto or purchasing it outright from an exchange, offering users to get their hands on these assets. It is a great way to generate passive income without selling their assets outright.

This article will take a quick look at staking, how it works, and some of its advantages.

What Is Staking?

Staking refers to the process of locking up user assets and earning interest on them, allowing holders to earn passive income without selling their assets. In simpler terms, it can be compared to putting money in a high-yield savings account. When you put your funds in such an account, the bank takes the money and lends it out to other customers. In return for locking their funds, the bank gives the user a small portion of the interest earned through lending. However, it is essential to remember that this yield is typically a relatively low amount.

In staking, when users lock their assets, they essentially lock their coins, enabling them to participate in the running of the blockchain and securing the network. In return for locking their funds, these users earn rewards that are typically much higher than interest rates offered by banks.

How Does Staking Work?

Let’s understand how crypto staking works. Firstly, it is possible to stake only on specific blockchains. These blockchains use the Proof-of-Stake consensus mechanism, which selects certain participants on the network to verify blocks of data and validate transactions on the network. The participants have to lock or “stake” their assets, after which the protocol chooses certain users, or validators, to verify and validate transactions on the network. The more assets you stake, the greater the chance to become a validator.

Each time a new block is added to the blockchain, new cryptocurrencies are minted and distributed as staking rewards to validators. The stake becomes the validator’s “skin in the game,” ensuring that they act honestly and in the network’s interest. Validators usually use staking pools, raising funds through a group of token holders via delegation. Staking pools significantly lower the entry barrier to staking, allowing more users to participate. Any user can participate in staking by delegating their assets to staking pools, allowing them to earn yield.

Validators are penalized if they act against the interest of the network. Penalties include being suspended from the consensus process or having their funds removed entirely. This is known as slashing and has occurred on a number of protocols, such as Ethereum and Polkadot. Each blockchain has different rules for validators and also differs when it comes to the stake required to become a validator. For example, to get started with staking on Ethereum, validators are required to stake at least 32 ETH.

Which Cryptocurrencies Can You Stake?

As mentioned earlier, staking is only possible with those cryptocurrencies that utilize a Proof-of-Stake consensus mechanism. Some prominent cryptocurrencies that you can stake are,

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

What Are The Advantages Of Staking?

Staking has several advantages. Let’s look at some of them.
Staking makes it easier to earn rewards. Any user can stake a small number of tokens and start earning yield. Compare this with miners, who require significantly more resources before being able to earn rewards.
Staking does not require specialized equipment. Anyone can become a validator using just about any regular computer, as long as they have the required stake.
Proof-of-Stake networks are also significantly less energy intensive than their Proof-of-Work counterparts. Validator nodes can be run on regular computers, consuming minimal energy.

In Closing

Crypto staking is an excellent way for users and investors to earn additional rewards on their long-term investments, earning significantly more than regular investments. Users can simply choose a staking pool with low commission fees, stake their assets, and earn rewards. While staking may sound complicated, you can easily participate in them through crypto exchanges such as Gate.io, which offers a low entry barrier and high return rate on staked assets.