Introduction

Staking is often compared to collecting the coupon on a bond you already hold: you put an existing asset to work, help the issuer, in this case, a blockchain run smoothly, and in return you earn protocol-native rewards. Failing to stake is “like buying U.S. Treasuries and choosing not to collect the interest.”

For institutional investors (banks, asset managers, funds, foundations and venture firms) staking has become a baseline strategy to capture yield, reinforce network security and gain governance influence, all while keeping counter-party risk lower than most off-chain yield products.

What is Staking?

Validator nodes are the backbone of blockchain networks. Some of these use a consensus algorithm called Proof of Stake (PoS). Staking means locking a blockchain’s native tokens in order to participate in its Proof-of-Stake (PoS) consensus process. Validators (or the service provider you choose) propose and attest to new blocks; in exchange, the protocol distributes new tokens or transaction fees to stakers. Your assets are not lent out, they remain on-chain and work directly for the network.

How does PoS work?

1. Commit capital: token holders delegate or run a validator node.

2. Validate blocks: the protocol pseudo-randomly selects validators in proportion to stake.

3. Earn rewards / face penalties: honest participation earns newly minted tokens; mis-behavior or downtime can trigger slashing, a partial loss of stake.

This is analogous to equity with a dividend and claw-back clause: you receive yield for constructive participation, but poor performance dilutes your capital.

The 3 main Staking models

Major Proof-of-Stake blockchains (2025)

Below is a short  list of leading PoS networks by market relevance. Think of them as the “investment-grade” issuers in today’s digital fixed-income market:

• Ethereum (ETH): the largest smart-contract platform

• Cardano (ADA): research-driven L1

• Tezos (XTZ): on-chain governance pioneer

• Solana (SOL): high throughput, low latency

• Polkadot (DOT): heterogeneous multichain security

• Polygon (MATIC): Ethereum scaling + PoS chain

• Avalanche (AVAX): subnet architecture

• Cosmos (ATOM): IBC interoperability hub

• Algorand (ALGO) : pure PoS with fast finality

• Near Protocol (NEAR): sharded, developer-friendly L1 

There are many other PoS networks.

Why Staking matters for institutional portfolios

Advantages for the broader ecosystem

• Security and Decentralisation: A diverse, well-capitalised validator set raises the cost of attack and distributes decision-making.

• Network Health: Staking aligns incentives; validators are penalised for downtime or malicious acts, keeping service quality high.

• Economic Sustainability: Reward emissions circulate to committed token holders rather than external miners, creating a self-reinforcing economy.

Staked assets vs. delegates assets: why the distinction matters

Before choosing a staking route, it is essential to separate two often-mixed notions: staking assets on your own and delegating your assets to a third-party validator.

Key take-aways

1. Same consensus role, different responsibilities: both stakers and delegators help secure the network; only the former must keep servers online.

2. Custody remains with the owner when delegating: tokens are merely linked to the validator via a smart-contract call; they are never moved off-chain or rehypothecated.

3. Slashing can still affect delegators: if a validator misbehaves, part of the delegated stake may be penalised proportionally, so due-diligence on validator performance is critical. 

Institutional perspective

Direct staking maximises gross yield and governance power but converts technical risk into headline risk. Delegation, especially through a Staking-as-a-Service provider that integrates with your preferred custodian, offers a “plug-and-play coupon” with lower operational friction. Choosing between the two is a portfolio-construction decision similar to weighing in-house trading desks versus outsourced execution.