Crypto staking allows holders of specific cryptocurrencies to earn rewards in return for validating transactions on a blockchain network. Staking allows token holders to earn more coins without ever having to sell their tokens. The staking process uses incentives and penalties governed by computer-based rules to encourage honest participation in the network. 

Stakers who act within the rules of the protocol receive rewards for their contributions, while those who act dishonestly can face penalties, such as losing their staked cryptocurrency through a process called slashing.

Learn more about staking in our article What is crypto staking?

Crypto staking is important because it rewards crypto token holders for their help in keeping the blockchain network secure and decentralized.

Only cryptocurrencies that use proof-of-stake (PoS) based consensus mechanisms can be staked. Bitcoin and other proof-of-work (PoW) coins cannot be staked. However, with Kraken opt-in rewards you are able to earn on a range of crypto assets, including some that cannot be directly staked.

Yes, staking carries risks, including market volatility, lock-up periods, potential slashing penalties and platform security issues. While staking on Kraken can help to lessen or even eliminate some of these risks, it’s always worth coding your own research before participating in crypto staking.

On-chain staking means staking directly on a blockchain network using its native protocol, without third-party intermediaries.

Yes, on-chain staking carries risks like market volatility, slashing penalties and smart contract bugs. It’s important to do you own research staking cryptocurrency directly on any blockchain.

Staking with Kraken is considered easier but involves additional fees and reliance on a third party platform. On-chain staking is regarded as being more decentralized and secure but requires more technical knowledge.