What Is Crypto Staking? How It Works, What It Pays and What Can Go Wrong
Staking explained without the hype: where rewards come from, what Sui, MultiversX and Radix actually pay, native vs liquid staking, and the five risks that matter.
Staking is the simplest way to earn on crypto you already hold, and also the most misunderstood. The word covers everything from securing a proof-of-stake network to an exchange promotion that has nothing to do with a blockchain. This guide explains what staking actually is, where the rewards come from, what it realistically pays on the networks JewelSwap supports, and the ways it goes wrong.
What staking is
Proof-of-stake blockchains such as Sui, MultiversX and Radix do not use miners. Instead, validators lock up the network's native token as collateral and take turns proposing and confirming blocks. If they behave, the protocol pays them newly issued tokens plus a share of transaction fees. If they go offline or misbehave, they lose rewards or, on some chains, part of their stake.
Most holders do not run a validator. They delegate: point their tokens at a validator and share in its rewards, minus a commission. Your tokens never leave your wallet's control, the validator cannot spend them, and you can undelegate later. That delegation is what most people mean by "staking".
Where the rewards come from
Staking rewards are not interest paid by a company. They come from two protocol-level sources:
- Issuance. The chain mints new tokens on a schedule and distributes them to stakers. This is why staking yields tend to fall over time as issuance schedules taper.
- Fees. A share of transaction fees is routed to validators and, through them, to delegators.
Because rewards are paid in the token you staked, the real return depends on the token's price. A 7% staking yield on a token that falls 30% is still a loss in dollar terms. Staking increases your token count; it does not protect you from the market.
What it pays on the networks we support
Yields move with total stake and issuance, so treat these as orders of magnitude, not promises, and check live figures before committing:
| Network | Typical delegation yield | Reward cadence | Unstaking delay |
|---|---|---|---|
| Sui | Low single digits (roughly 2–3%) | Every epoch (~24h) | Next epoch boundary |
| MultiversX (EGLD) | Mid to high single digits | Every epoch (~24h) | 10 epochs (~10 days) |
| Radix (XRD) | Mid single digits | Continuous, per epoch | 500 epochs (roughly one to two weeks) |
Validator commission is deducted before you see any of this. A 5% commission on a 3% yield leaves you with 2.85%; a 100% commission, which exists on some networks, leaves you with nothing. Always check it.
Native staking vs liquid staking
Native delegation locks your tokens for the unstaking period. Liquid staking gives you a token that represents your stake so you can keep using the value while it earns. On JewelSwap, you mint JWLSUI, JWLEGLD or JWLXRD 1:1 against the underlying, stake it into the appreciating SJWLSUI, SJWLEGLD or SJWLXRD variant, and can unstake instantly back to the base token. Redeeming the base token for the original asset takes the network's 10-day unbonding period, tracked by a transferable claim NFT. The trade-off is that the liquid token can trade below its backing on the open market when many people want to exit at once. We compare the two models in detail in liquid staking vs native staking.
What "staking" on an exchange actually is
When a centralised exchange offers "staking", one of three things is happening: it delegates on your behalf and keeps a cut; it lends your tokens out and calls the interest staking; or it runs a promotional rate funded from its own pocket. Only the first is staking. The second and third carry counterparty risk that has nothing to do with the blockchain, which is why "staked" balances vanished in every major exchange collapse. If the yield is far above what the network pays validators, the difference is someone's balance sheet, not the protocol.
The risks that actually matter
- Price risk. The dominant one. Rewards are paid in a volatile asset.
- Lock-up risk. You cannot sell during the unbonding period. Ten days is a long time in a crash.
- Validator risk. Downtime costs rewards; on some chains, slashing costs principal. Delegating across several validators, as JewelSwap's Gauge mechanism does, reduces this.
- Smart-contract risk. Liquid staking adds a contract between you and the validator. Read the docs, check the audits, and size positions accordingly.
- Counterparty risk. Exchange and "earn" products are loans to a company. Treat them as such.
How to start
Pick the network whose token you already hold. Decide whether you want liquidity (liquid staking) or simplicity (native delegation). Check the validator's commission and uptime. Stake an amount you will not need for a month. Then leave it alone; the compounding does the work.
Step-by-step guides: how to stake SUI, how to stake EGLD, and JWLXRD liquid staking on Radix. For how staking fits alongside lending and farming, read what is DeFi.
