Staking — what you earn, what you risk, what is taxed

A proof-of-stake network is secured by people who lock up its coins and vouch for its transactions, and it pays them for the service in new coins and fees. That payment is staking yield, and it is the most widely advertised number in crypto. This page is what the number is made of, what can take it away, and what the tax authorities and regulators in the United States have said about it — on Ethereum and Solana, with every figure dated, because every one of them moves.

What you are being paid for

On Ethereum a validator is a deposit of at least 32 ETH (and now as much as 2,048) that runs software to propose and attest to blocks. Its reward has two parts. The first is issuance: new ETH the protocol creates for honest validators on the consensus layer, where the amount issued each day "is dependent upon the total ETH staked." The formula in the protocol pays each validator in proportion to 1 over the square root of all the ETH staked — so as more ETH is staked, each validator earns less, while the network's total issuance grows as the square root. The second part is fees: the priority fees and value from ordering transactions ("MEV") that a validator collects when it is its turn to propose a block.

On Solana there is no 32-coin threshold; holders delegate stake to a validator of their choice and share its rewards, net of the commission it charges. Rewards come from the protocol's inflation schedule — 8% a year at launch, falling 15% each year toward a long-term 1.5% — which was running at about 3.8% in mid-2026, plus tips and priority fees. In August 2026 Solana's validators voted to double the disinflation rate to 30% a year; as of mid-October that change had passed but was not yet live in the software.

What the number is, today

Yields are quoted several ways, so the same network shows different figures on different pages.

About 35% of all ETH and roughly 70% of all SOL was staked at those readings. Three things turn the headline into what you actually get. The validator or pool takes a commission. A validator that goes offline earns nothing for the time it is down and pays small penalties for it. And the yield is nominal — paid in a coin that is being issued. Coin Metrics' way of saying it: "staking yield can be evaluated in nominal or real (inflation-adjusted) terms," and at the end of 2024 they put Ethereum's at 3.08% nominal and 2.73% real. On Solana the arithmetic is sharper: with inflation near 4% and 70% of the supply staked, the inflation is the yield — it is paid to stakers out of everyone's holdings, so, as Helius puts it, "proof of stake inflation decreases the network share of non-stakers relative to stakers." A staker is mostly being compensated for not being diluted.

None of which is the main risk. The main risk is that the yield is denominated in the token. A 3% yield on an asset that falls 40% is a 38% loss, and no staking page says so because it is not the staking page's business.

What can take it away

Slashing. On Ethereum, provable misbehaviour — signing two different blocks for the same slot, or two conflicting attestations — "results in slashing: part of the validator's stake is destroyed and the validator is forcibly removed from the network." It is reserved for offences that look like attacks, but the usual cause is an accident: the same validator keys running on two machines at once. On October 11, 2023, a Lido operator's twenty validators were slashed after a data-centre failover started a second signer without slashing protection; the initial penalty was 20 ETH and the total impact, including missed rewards, about 28.7 ETH. The operator covered it. Solana's documentation says "there is no in protocol implementation of slashing currently"; the docs note that delegators "could risk losing tokens" in future if it is added.

Lock-ups and queues. Staked ETH cannot be sold the moment you want it back. Validators enter and exit through rate-limited queues — ethereum.org says activation "can range from hours to weeks" and exits go through "a similar rate-limited queue." Withdrawals have been possible since the Shapella upgrade on April 12, 2023; before that, staked ETH could not be withdrawn at all. On Solana delegated stake warms up and cools down at 25% per epoch, and an epoch is now about a day.

The receipt token. Most people do not run validators; they hold a liquid staking token such as Lido's stETH, which represents ETH staked on their behalf and which they can sell at any time — at whatever price the market offers. That price can be lower than the ETH behind it. Lido's own documentation lists the risk plainly: users "risk an exchange price of stTokens which is lower than inherent value." In June 2022, as Celsius and Three Arrows unwound, the discount reached a record 8%; a holder who needed ETH that week sold 1 ETH of claim for 0.92. Since withdrawals opened, redeeming stETH for ETH through Lido takes one to five days in normal conditions, through a queue.

The custodian. Staking through an exchange means the exchange holds the coins. ethereum.org's assessment of that option is one word: "No. The exchange has custody of your ETH," and it "creates a large centralized target and point of failure." Everything above about slashing and queues still applies, one layer away from you, under the exchange's terms.

What is taxed (United States)

The IRS answered the main question in 2023. Under Revenue Ruling 2023-14, "the fair market value of the validation rewards received is included in the taxpayer's gross income in the taxable year in which the taxpayer gains dominion and control over the validation rewards" — that is, when you can sell them, not when you do — and "the same is true if a taxpayer stakes … through a cryptocurrency exchange." In June 2026 the Tax Court reached the same conclusion in Paschall v. Commissioner: rewards are income on receipt. So a staker owes ordinary income tax on coins received at their value that day, and then capital gains or losses on the move from that value when the coins are eventually sold. A yield of 3% in a coin that then halves is still 3% of income on the day it arrived. Ask a tax professional about your own case; this is what the ruling says, not advice about it.

What the regulators have said

In May 2025 the SEC's Division of Corporation Finance stated its view that protocol staking — running your own validator, staking through a third party while keeping your keys, or staking through a custodian — does "not involve the offer and sale of securities." In August 2025 a second statement extended the view to liquid staking receipt tokens. Both carry the same caveat in their own text: a staff statement "has no legal force or effect," and neither addresses restaking. Two years earlier, in February 2023, Kraken had paid $30 million to settle SEC charges that its staking-as-a-service program was an unregistered securities offering and agreed to stop offering it. The ground has moved, and the honest summary is that it is still staff guidance rather than law.

The short version

Staking yield is new coins plus fees, paid in a currency you are already exposed to. Quote it net of commission, net of inflation, and against the price risk of the coin itself, and the number shrinks to what it is: a few percent for lending the network your capital and your uptime. The money can be slashed by a mistake, locked by a queue, discounted by a receipt token's market, or lost with a custodian — and in the United States it is income on the day you receive it. The desk's own crypto area, when it opens, will carry these figures with their dates the way this page and the perpetuals page do, and will not call any of it passive.

• What a perpetual future is and how funding works
• Spot vs perps vs on-chain: where a trade actually happens
• Holding your own keys: what a signature proves, and what nobody should ask you for
• The vault: hash-based keys and what they protect
• Liquidity pools and impermanent loss, with the arithmetic
• Post-quantum on a token vs in a wallet: what the words can and cannot mean

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