What is Staking?

Staking is locking up a chain’s native token to help secure a proof-of-stake network and earning rewards for doing so. Validators run the software that proposes and confirms blocks, and the stake is their bond: honest work earns new tokens and fees, dishonest or absent work can be penalized by having stake taken away. Most holders do not run a validator themselves; they delegate to one, or hold a liquid staking token that does it for them. Delegating never hands the validator your keys; it assigns your stake to them and can be withdrawn on the chain's own schedule.

The forms differ by chain. On Ethereum, staking through a protocol such as Lido returns a liquid token, stETH, that represents the staked ETH plus accruing rewards and can be used elsewhere in DeFi. On Solana, a stake account is delegated to a validator and the SOL in it is locked and earning until it is deactivated. On exchanges, staking products are a custodial service where the exchange stakes on your behalf and pays a stated rate. Unstaking usually takes days, which is the liquidity cost of the reward.

Rewards are the part that confuses accounting. A liquid staking token grows in value rather than paying out, a Solana stake account grows in balance, an exchange product pays a rate, and in many jurisdictions each reward is income when it is received. The APR shown at the start is never the realized figure, because rates move with how much of the network is staked.

A tracker has to see staked assets as part of the position, not as a gap between wallet balance and net worth. TrueHold counts Solana stake accounts into the SOL position, reads liquid staking tokens at their value, and pulls exchange earn balances through the same read-only key as everything else.

Slashing, the penalty for validator misbehavior, is the risk on the other side of the reward. Delegators to a slashed validator share the loss on most chains, which is why the choice of validator is a real decision rather than a formality.