TL;DR: Staking is locking crypto on a proof-of-stake network to help validate transactions, in return for a variable reward. You can do it yourself or via a provider. The reward is often paid in the same crypto, so its euro value also depends on price. Risks: price falls, lock-up period, slashing (a penalty when a validator misbehaves), failures at providers or protocols and loss of access to your crypto.
What can you expect?
- Time per week
- Little time per week if you stake via a provider. Staking yourself and keeping track of rewards, security and records takes more time.
- Starting capital
- There is no fixed minimum, but some methods require a minimum amount. Stake only crypto you can lose entirely. Your crypto may be locked for a while.
- Typical setbacks
- Price falls larger than the reward, lock-up periods, slashing, outages or insolvency at a provider, and loss of access. You can lose your entire stake.
- Costs
- Provider commission on the reward, network fees when moving or entering and exiting, trading costs and spread when buying and selling, and possible costs for liquid staking. Compare provider costs.
- Not suitable if…
- Not suitable if you need the crypto soon, cannot tolerate price falls or expect a fixed return. There is no deposit guarantee.
How it works
With 'staking' you lock crypto on a network that uses proof of stake, such as Ethereum. The network uses locked crypto to check transactions and pays a reward for it, usually in the same crypto. That reward is variable, depends on the network and the number of participants, and a provider may keep part as commission. You bear risks that do not exist with savings: the price of the crypto can fall sharply, your crypto can be locked for a while, and errors or outages can make you lose part of it. There is no deposit guarantee. This is an explanation, not advice and no promise of returns.
Core principles
- 1. Staking is not a savings account: the reward is variable and the price of the crypto can move far more than the reward
- 2. Know what happens to your crypto: who holds it, can you lose it, how long is it locked
- 3. Compare the full costs, including provider commission and network fees
- 4. Stake only crypto you can afford to lose and deliberately will not need for a longer time
Step-by- step plan
- 1
Understand what you buy and lock
Read how the network works, how the reward is set and which risks apply. Decide how much of your crypto you would be willing to stake.
- 2
Choose the way to stake
Compare staking yourself, a provider and liquid staking on risk, cost and convenience. Read the terms.
- 3
Check provider and costs
Check authorisation (MiCA), commission, terms and what happens in an outage or insolvency. Compare costs across providers.
- 4
Stake part and secure your access
Start with a small amount. Use strong security (such as a hardware wallet or two-step verification) and keep your recovery codes carefully stored.
- 5
Track and review
Record when you received rewards and what they were worth. Periodically check whether costs, risks and terms still fit.
In detail
How does staking work?
With proof of stake, transactions are checked by participants (validators) who lock crypto as collateral. If they do their job well, they receive a reward. If they do not, they can lose part of their stake. That is called slashing.
As an individual you can run a validator yourself or entrust crypto to a provider, such as a trading platform or a staking service. You then usually receive part of the reward, minus a commission.
The reward depends on the network and the number of participants. It can therefore change. A percentage you read somewhere is a snapshot.
Choosing: self, via a provider or 'liquid staking'
Staking yourself gives the most control, but needs technical knowledge, a minimum amount and security measures. A provider is simpler, but you entrust your crypto to a party and pay commission. With 'liquid staking' you receive a token that represents your staking position and that you can trade. This increases risk: the token can be worth less than the underlying crypto and smart contracts can contain bugs.
For every choice ask: who holds my crypto, how long is it locked, what are the costs and what happens if the provider goes insolvent? There is no deposit guarantee.
Risks in practice
The biggest risk is usually the price. If the crypto falls 30%, a reward of a few percent per year is not enough to compensate. See the worked example.
Also: during the lock-up period you cannot always sell; validators can be penalised (slashing); providers can go insolvent or be hacked; smart contracts can contain bugs. The European MiCA regulation sets requirements for crypto-service providers, such as authorisation and disclosure duties, but does not protect against price losses and gives no deposit guarantee.
Tax and records
For Dutch individuals, crypto usually falls under box 3 (wealth). Tax is in principle calculated on your wealth on the reference date, 1 January. How the rules apply to staking rewards exactly can depend on your situation and on changing legislation and case law. So there is no simple answer that applies to everyone.
Consult belastingdienst.nl or a tax adviser for current rules. Keep a record of what you locked, when you received rewards and what they were worth at that moment. That helps with your return.
- Basic understanding of crypto and wallets
- Long-term view on the crypto you stake
- Acceptance of high price risk
- Staking provider or validator with clear terms
- Wallet with strong security
- Spreadsheet for rewards and costs
- 01 You understand how the network works, what determines the reward and that it can change
- 02 You know the lock-up period and how and how fast you can exit
- 03 You have checked the provider and terms, including commission, authorisation and how client assets are held
- 04 You stake only part of your crypto and keep the rest as a reserve or outside staking
- 01 You need the money or your goal has changed
- 02 The provider or protocol changes terms, costs or risks to your disadvantage
- 03 There are signs of trouble at the provider, validator or protocol
- 04 You want to reduce risk, for example because the price has risen or fallen sharply
Worked example
Hypothetical example (all amounts are assumed). You lock 10 units of crypto. Price at start: €2,000, so €20,000. The provider keeps 15% of the reward as commission.
The reward is variable. Three assumed yearly scenarios:
| Gross reward | Gross in units (10 x %) | Commission (15%) | Net in units | Net per year |
|---|---|---|---|---|
| 2% | 0.20 | 0.03 | 0.17 | 1.7% |
| 4% | 0.40 | 0.06 | 0.34 | 3.4% |
| 6% | 0.60 | 0.09 | 0.51 | 5.1% |
Formula: net reward = gross reward x (1 - commission). At 4%: 0.40 x 0.85 = 0.34 units.
Now the price. In the 4% scenario, after a year you hold 10.34 units.
- Price unchanged (€2,000): 10.34 x 2,000 = €20,680 (+3.4%)
- Price -30% (€1,400): 10.34 x 1,400 = €14,476 (-27.6% compared with €20,000)
A price fall can therefore be much larger than the reward. This also applies to an assumed reward; real rewards change and may be lower. Possible slashing, lock-up time and costs are not included here.
Tax is not included in the example. Consult belastingdienst.nl or a tax adviser. This is a calculation example, not an expectation.
Hypothetical example, not advice.
Work it out yourself
Risks and risk management
- Price risk: the euro value of your crypto can fall much more than the reward earns
- Lock-up: you cannot always sell, even if the price falls sharply
- Slashing: a validator that breaks the rules can lose part of the staked crypto
- Provider and protocol risk: insolvency, hacks, smart contract bugs or loss of access. There is no deposit guarantee
- Stake only part of your crypto and decide in advance how much loss you can bear
- Choose a provider with a MiCA authorisation or preferably self-custody, and secure your access
- Diversify across more than one provider or validator and limit the amount per party
- Keep a record of rewards, costs and price, also for your tax return
Learn the basics
Key takeaways
- Staking pays a variable reward, not a fixed return. The price of the crypto is often more important than the reward.
- You bear extra risks: lock-up time, slashing, failures at providers or protocols.
- There is no deposit guarantee. MiCA sets rules for providers but does not protect against price losses.
- Tax rules can change: check belastingdienst.nl or ask a tax adviser.
Frequently asked questions
What is the difference between native staking and liquid staking? +
With native staking you lock crypto directly, with more control but also more responsibility. With liquid staking a protocol gives you a token that represents your position and that you can trade. That is more flexible but brings extra risks, such as smart contract bugs and a token that can be worth less than the underlying crypto.
What is slashing and how big is the risk? +
Slashing is a penalty for validators that break the rules, for example by double signing or being offline for long. You can lose part of your staked crypto. The likelihood differs by network and provider. Ask a provider what happens if this occurs and whether there is compensation.
How is staking taxed in the Netherlands? +
For individuals, crypto usually falls under box 3, with 1 January as the reference date. How rewards are treated exactly can depend on your situation, and rules and case law can change. Consult belastingdienst.nl or a tax adviser for current information.
Origin
General technique