How to stake Ether

two phones with ethereum logos

There are plenty of benefits to using crypto and a self-custody wallet, including being able to participate in staking. Staking is a mechanism that allows you to participate in securing your favorite network while also potentially outpacing the returns you’d find elsewhere.

What is staking?

In short, staking is a way that holders of various cryptocurrencies can earn rewards on your selected crypto (which are distributed via smart contracts,) in exchange for helping to secure the blockchain. With proof-of-stake networks like Ethereum (after the merge), Avalanche, or Solana, individuals can delegate their tokens to validators, which are specialized computers that secure the blockchain by validating the transactions that are made using the network.

Many blockchains utilize staking to incentivize users to contribute to the security and trustworthiness of their platforms, in a process known as proof-of-stake (a type of staking, as opposed to proof-of-work). When you stake your tokens on a proof-of-stake network, you are backing a specific validator to only certify valid transactions. A portion of the network fees (a.k.a. gas fees) are distributed back to validators and those who delegate their tokens to them.

Okay, I want to stake. What do I do?

  • We’re going to show you how to stake Ether using a popular staking dapp called Lido. You’ll need a self-custody wallet, like Coinbase Wallet, to use this dapp.

  • Typically to stake Ether, users need at least 32 ETH, which is a significant sum of money for most people. But using a dapp like Lido, people can pool any amount of ETH alongside that of other users and earn rewards proportional to the amount of ETH they’ve contributed to the pool.

  • Since Lido is what is called a “liquid staking solution,” you can withdraw your staked ETH at any point, despite the fact that staked ETH is currently locked until the merge is complete.

  • Lido is currently the most popular app on which to stake ETH, with the equivalent of nearly $11 billion currently being staked there. You can also use Lido to stake assets like Solana, Kusama and Polygon.

  • To start, open up your Coinbase Wallet app, navigate to the browser, and go to Tap the menu icon in the middle of the screen, select Stake Now and choose Ethereum 2.0.

  • You’ll be taken to a screen where you can choose how much of your ETH you’d like to delegate to staking, review the transaction costs, and see what your annual return on staking is estimated to be. Currently, staking ETH on Lido offers 3.5% rewards, which is higher than the national average savings account interest rate of .006%.

  • Note that the higher rewards come with potential risk of loss of ETH due to slashing, so read the terms and conditions carefully before proceeding.

What if I don’t want to use a self-custody wallet?

  • Not everyone wants to self-custody their assets, but that doesn’t mean they still can’t earn staking rewards. Through Coinbase’s built-in staking feature, anyone can stake their ETH (as little as you’d like) in just a few taps.

  • In your Coinbase app, navigate to the ETH asset page. You’ll see a prompt to stake your ETH (at the time of publishing, the Ethereum network offers annual returns of 3.65%). Coinbase does not have control over the annual rewards rate.

  • You’ll then need to select how much ETH you’d like to stake, read and agree to the terms and conditions, and then confirm your request to stake your ETH.

  • A major thing to note – staking your ETH on Coinbase means that per the Ethereum protocol, staked ETH will be  locked up and inaccessible until Ethereum fully completes its transition from proof-of-work to a proof-of-stake blockchain.

And that’s it! You’re now staking ETH, helping keep its network secure and earning rewards that, at their current rate, outpace what you’d earn if you simply held onto cash. Want to stake other assets and participate more in the crypto ecosystem? See our guide on how you can stake your MATIC.