What is staking in cryptocurrency and how does it work?

The complete guide to crypto staking: how to earn passive income and track promising projects

Crypto staking is not only a way to earn passive income but also a tool for long-term participation in the crypto ecosystem. However, not all staking programs are equally profitable. Some projects offer high APY at the start, while others introduce unique mechanisms like NFT staking.

In this guide, we’ll cover:

• How staking works and its different types.

• How to choose reliable and promising staking projects.

• Why new staking programs often offer high APY.

• What NFT staking is and how to profit from it.

• Where to track the latest staking opportunities and events.

By the end of this article, you’ll not only understand staking but also learn how to make the most of it. 

What is crypto staking

Staking is the process of locking up cryptocurrency in a network to support its operations and earn rewards.

How does staking work

Some blockchains operate on the Proof-of-Stake (PoS) mechanism, which requires participants to lock up tokens to validate transactions. In return, users receive new tokens as rewards. Staking can be compared to a bank deposit: you "deposit" your tokens, and the blockchain rewards you with additional tokens over time.

Example: You buy 10 SOL (Solana) and stake them. After a year, your balance increases to 11 SOL due to earned rewards. 

Types of staking

• Traditional staking (PoS): Locking tokens in a blockchain to support its operations.

• Delegated staking (DPoS): Users delegate their tokens to validators who handle staking.

• Liquid staking: Allows staked tokens to be used in DeFi via derivative assets (e.g., stETH from Lido).

• Exchange staking: Centralized exchanges handle staking on behalf of users (e.g., Binance Earn, Kraken Staking).

• DeFi staking (Yield farming): Providing liquidity to DeFi protocols in exchange for rewards.

• NFT staking: Locking NFTs to earn rewards. 

Why do new staking programs offer high APY

New projects often attract users by offering high annual percentage yields (APY).

Why does this happen?

• Liquidity boost: Projects distribute more tokens to encourage participation.

• Low competition: Early participants earn higher rewards before the project gains traction.

• Marketing strategy: Some projects intentionally offer high APY to generate hype. 📢

Example: When the Avalanche (AVAX) blockchain launched, staking rewards on some platforms reached 200-300% APY. Over time, they dropped to 5-10% APY.

What to consider?

• High rewards come with high risks – The token’s value may drop.

• APY usually declines over time – Early-stage rewards are temporary.

• Smart contract security – If staking is managed via smart contracts, always check for audits. 🔒

How to track new staking project

To find promising staking opportunities, stay updated on crypto trends.

Where to look for staking programs?

• CryptoCalendar.ai – Tracks staking-related events.

• Twitter (X) – News from official project teams.

• Discord & Telegram – Community discussions in project channels.

Pro tip: Watch for major blockchain upgrades (e.g., Ethereum 2.0, Solana), as they can impact staking profitability.

What is NFT staking

NFT staking allows holders of non-fungible tokens (NFTs) to earn rewards by locking their assets.

How does it work?

• You buy an NFT from a collection that offers staking.

• You stake the NFT on a platform.

• You receive rewards in tokens or additional NFTs. 

Examples of NFT staking projects:

• DeGods (Solana): NFT holders earned DUST tokens.

• CyberKongz: Staking NFTs generated BANANA tokens.

• Mutant Ape Yacht Club: Provided exclusive drops for holders. 

Benefits of NFT staking:

• Passive income opportunities.

• Access to exclusive events and drops.

• Increased demand for NFTs with staking utilities.

Risks of NFT staking:

• NFT prices may drop.

• High fees for deposits/withdrawals.

• Some projects may turn out to be scams. 

Where to find NFT staking projects

• Magic Eden (Solana)

• OpenSea (Ethereum, Polygon)

• LooksRare (Ethereum)

Conclusion

Staking is one of the best ways to earn passive income in the crypto world. However, it’s important not just to participate in staking but to choose the most profitable and secure options.

• Stay updated on new staking opportunities.

• Adjust your strategies based on risk and reward levels.

• Use trusted platforms to minimize risks.

• Keep track of the latest staking events and make informed decisions to maximize your profits!