What is Staking?
Locking crypto to help secure a proof-of-stake network in exchange for rewards — with tax and lock-up consequences.
Staking is locking your coins to help secure a proof-of-stake blockchain — validators put up stake as collateral for honest behaviour, and the network pays rewards for it. For holders it looks like interest: deposit ETH, SOL or similar, receive a yield in kind. Unlike DeFi lending, native staking's yield comes from the protocol itself — the most legible yield in crypto.
The honest caveats: rewards are paid in a volatile asset (a 5% yield on a coin that halves is still a loss in dollars), unstaking can involve waiting periods, validators can be penalised ("slashed"), and staking through platforms adds counterparty risk in exchange for convenience. The staking calculator runs the compounding maths with the tax treatment included.
And the tax treatment bites: the ATO treats staking rewards as ordinary income at receipt, valued in AUD that day — then each reward parcel starts its own CGT clock. The honest maths article works the full example, including the ugly scenario where tax is owed on rewards whose price has since collapsed.
See it in practice
Related terms: Ethereum · Capital gains tax (CGT) · DeFi · full glossary
FAQ
Is staking safe?
Native protocol staking is among crypto's lower-risk yields, but "lower-risk" is relative: the asset itself stays volatile, unstaking may be delayed, and staking via exchanges or DeFi adds layers of counterparty and contract risk on top.
Do I pay tax on staking rewards I haven't sold?
Yes — the ATO treats rewards as ordinary income at their AUD value the moment you receive them, whether or not you sell. Selling later is then a separate CGT event measured from that value.
General information only, not financial advice. Definitions are maintained in our fact database and reviewed with the daily rebuild.