What is staking in crypto?

Staking: Locking coins to help secure a network in return for a reward. There are risks, such as being locked in or a provider error.

Some blockchains, such as Ethereum, use staking to decide who may add new blocks. Whoever locks coins helps keep the network secure and gets new coins in return.

The reward is often shown as a percentage per year. You receive it in coins, not in euros. What it is worth in euros therefore depends on the price.

Many people stake through a trading platform or a service. It takes care of the technical work, but often keeps part of the reward as a fee.

Example
You lock 2,000 euros worth of coins at a 4 percent yearly reward. After a year you have 4 percent more coins. If the price falls 30 percent that year, all your coins together are worth 2,080 times 0.7, which is 1,456 euros.

Watch out
Coins can be locked for a while, so you cannot sell straight away. An error or bankruptcy at the provider can also cost money.

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