6 key things to know about crypto staking – and how you can do it – in 2025
For advanced traders, crypto staking with Kraken can be a useful tool in your investing arsenal.
Sponsored by Kraken. With Kraken PRO, you can buy more than 350 crypto assets and gain access to advanced trading strategies.
Advanced crypto investment goes beyond the basics of buying, swapping, selling and then waiting for prices to rise.
Depending on the type of crypto you own, you may also be able to stake it.
Today, let's take a look at the key fundamentals to know about staking.
1. What is staking anyway?
Staking involves taking some of your cryptocurrency out of storage and putting it to work on the blockchain.
Many blockchains require tokens or cryptocurrency to function, so staking allows you to contribute to the network.
You're not lending the crypto out. You're putting it to work temporarily. You'll get it back, plus rewards.
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2. How to start staking
There are different ways to stake your crypto.
You can do it directly, in a pool with other crypto investors or via a third party, like a validator node or an exchange.
Staking via Kraken is called "exchange staking".
This means that the exchange handles all the behind-the-scenes details, making it a less tech-dense and more streamlined experience for investors.
To stake with Kraken, all you need to do is:
- Sign up for a Kraken account
- Buy or deposit staking assets
- Select the available crypto asset and choose "Stake"
📈These are some of the cryptocurrencies that are able to be staked via Kraken:
- Bitcoin
- Ethereum
- Solana
- TRON
- The Graph
It's important to remember that not all cryptocurrencies are able to be staked. You can see a complete list on the Kraken website.
So that's how you can stake crypto.
But equally important, if not more so, is why crypto investors do it.
Kraken x Fred Schebesta
Finder Founder Fred Schebesta shows advanced crypto traders some of his key investing tips, and how the Kraken Pro app can assist.
3. Why people stake
The main reason investors stake is to earn rewards, usually in the form of coins and tokens.
It's generally the same type of crypto that you originally stake.
It's somewhat akin to earning interest from a savings account or via a term deposit.
📈The reward you'll earn will vary depending on the provider you're using and the type of cryptocurrency you stake.
Kraken allows you to earn staking rewards of up to 21%.
We'll talk about some of the ways that advanced investors use these rewards at the end of this article.
However, there are also more altruistic reasons for staking too.
By staking your crypto, you're able to help the underlying Blockchain validate the transactions that take place within the time you're staking.
This is via a process called "Proof-of-Stake".
Proof of stake and proof of work are the two major ways that cryptocurrencies verify transactions and add them to an existing blockchain. These are referred to as "consensus mechanisms" because they operate according to a user consensus.
In essence, enough users "agree" that a transaction has taken place and that it should be verified.
Proof of work relies heavily on powerful computer hardware to solve complex maths puzzles. The bigger the transaction, the more complex the puzzle.
It's a highly secure means of protecting the blockchain but is increasingly intensive as the blockchain grows.
By contrast, proof of stake lets people "lend" their crypto to validate transactions. It's less power-intensive, while still enabling rewards.
So you're able to earn crypto while also assisting the wider crypto community in the process.
4. The benefits
So aside from creating some warm and fuzzy feelings in a like-minded community, are there more tangible ways that staking can benefit you as an investor?
Potentially, yes.
After all, the rewards you earn are a form of passive "income" on an existing crypto asset.
This can be useful in its own right, as well as potentially buffering the value of your crypto against wider inflation within your home country (depending on where you live, of course).
Depending on your staking participation, you may also be able to have a say in blockchain governance decisions.
If you're interested in the tech aspects of crypto as well as the investing side, this can be an effective way to get involved.
Additionally, as crypto exposures run, staking is relatively low-risk (though not without risk entirely, which we'll discuss shortly).
5. Risks and tradeoffs
Because staking requires that you temporarily "lend" your crypto, there can be some risks involved.
- You'll have reduced liquidity: Staking is often (though not always) for a predetermined amount of time. Unstaking it early can invoke a range of penalties, from losing your rewards to outright losing your crypto! So if you prefer to keep your pool of crypto relatively liquid for regular trading, staking may not be the best fit for your investment style.
- Shifting asset prices: Crypto is a volatile, high-risk market and prices can fluctuate regularly. Moving assets around at speed can be key. So not having direct access can potentially present an issue.
📈The good news is that there are ways to offset these risks.
For example, staking via Kraken lets you unstake at any time without penalty.
In turn, this means that you're also able to respond rapidly in the event of market movements.
6. Prospective uses for your rewards
So once you've earned your rewards, how do you use them?
There's no specific right way to use it. It's very much down to the individual investor.
Some investors will simply grow their holdings in the cryptocurrency that they're staking.
Others may choose to reinvest elsewhere.
Selling or trading your coins and tokens can potentially allow you to make purchases in other cryptocurrencies that you find more desirable, or that you feel have future potential.
Using them to cover expenses like trading costs can also be useful.
📈Kraken also allows staking rewards to be converted to fiat currency as well as a variety of different international currencies.
However, it's important to remember that earnings via staking can have tax implications in Australia for your overall crypto holdings. They are not "freebies".
If you're after more information, you can check out the Kraken Australian crypto tax guide.
Learn more about staking with Kraken today
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