When beginners hear “staking,” their first thought is often: deposit your coins and earn interest while you sit back. That’s only half right. Today, using the latest data I’ve just gathered, I’ll explain ETH staking and liquid staking (LST).
1. What exactly does staking do?
Ethereum is a proof-of-stake network. Validators must lock up 32 ETH as collateral and are responsible for proposing and validating blocks. If they do a good job, the network rewards them; if they act maliciously or stay offline for too long, some of their collateral may be slashed. So staking rewards aren’t “interest”—they’re more like compensation for putting up collateral to help secure the network. The rewards come from protocol issuance and tips paid by users for transactions.
II. How ordinary users can participate
Running your own node has a high barrier to entry: you need 32 ETH and reliable ongoing maintenance. So two simpler options have emerged:
1. Staking products on exchanges. They’re easy to use, but your assets are held by the platform, so you have to accept the platform’s risks.
2. Liquid staking protocols (LSTs). You deposit ETH and receive a “receipt token” in return, such as stETH, WBETH, or rETH. The receipt token appreciates as staking rewards accrue, and you can still use it in DeFi.
III. A look at some recent figures
According to DefiLlama data from the evening of 2026-10-26:
• Lido (stETH) has an annualized yield of about 2.24%, with around $22.46 billion locked on-chain, down from about $26.47 billion a month ago—a decline of about 15% (partly due to changes in the price of ETH).
• Binance staked ETH (WBETH) has an annualized yield of about 2.16%, with around $8.1 billion locked.
• Rocket Pool (rETH) has an annualized yield of about 1.83%, with around $1.12 billion locked.
As you can see, the annualized yield for mainstream ETH staking is roughly 2%, which isn’t particularly high. It’s more like “extra income” from holding ETH than a yield-generating tool. And this figure fluctuates: the more people stake, the less each person receives.
IV. Four risks beginners are most likely to overlook
1. Depeg risk: The exchange rate between a receipt token and ETH isn’t guaranteed to stay at 1:1. During market panics, selling on the secondary market may mean accepting a discount.
2. Smart contract risk: A vulnerability in the protocol’s code could result in asset losses. Major protocols undergo more audits, but that doesn’t eliminate the risk.
3. Slashing risk: Nodes that misbehave or go offline can be penalized. Protocols usually spread assets across many nodes to reduce the impact, but the risk isn’t eliminated entirely.
4. Exit queues: Redeeming ETH directly from a protocol requires waiting in a queue. During peak periods, it can take several days or even longer.
V. A few of my own habits
• First, think about how long you can leave this ETH untouched. Money you’ll need in the short term isn’t suitable for staking.
• Don’t put all your ETH into a single protocol; spread it around.
• When looking at annualized yields, keep price fluctuations in mind too. A price move against a 2% annualized yield could wipe out a year’s worth of rewards in a single day.
• Before using LSTs in more complex DeFi strategies, make sure you understand the basic risks. Don’t let high annualized yield figures tempt you into rushing in.
To sum up: staking means providing collateral to the network in exchange for rewards. LSTs keep those assets liquid, but introduce additional smart contract and depeg risks. Understanding these points before deciding whether to participate matters more than fixating on the annualized yield.
How do you currently hold your ETH—do you self-custody it, keep it on a platform, or have you already staked it with a protocol? Feel free to share your approach in the comments.
The data above comes from public sources and is for educational purposes only. It does not constitute investment advice.