How to Passively Grow your Crypto Portfolio Through Crypto Staking

Ruby Layram 12th Mar 2025 No Comments

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Passively growing your portfolio is perhaps one of the most sought-after benefits of investing. You invest your money, sit back, and watch it grow with minimal effort. Sounds great, doesn’t it?

Well, thanks to crypto staking, earning passive rewards from crypto is possible for many investors. Staking could be a good way to gain additional cryptoassets that you are willing to hold for a long time.

In this guide, we will explain how to earn passive rewards through crypto staking as well as our top tips for maximizing your returns.

What is Crypto Staking?

Crypto staking is a process where you lock up your cryptocurrency to help secure a blockchain network and, in return, earn rewards.

Think of it as putting money in a high-interest savings account—the longer you leave it in, the more interest you earn on the assets you deposited.

Unlike traditional crypto mining, which requires expensive hardware and high energy consumption, staking is a more eco-friendly way to support blockchain operations.

It’s primarily used in networks that operate on a Proof of Stake system, as opposed to Bitcoin’s Proof of Work model.

Some of the most popular coins that can be staked include:

Ethereum (ETH)
Cardano (ADA)
Polkadot (DOT)
Solana (SOL)

In simple terms, crypto staking allows you to earn passive rewards by contributing to the security and efficiency of a blockchain network (a fancy term for the technology that crypto is built on.)

How Does Staking Work?

Staking works by locking up your coins in a wallet or staking pool. During this time you’re unable to sell the locked crypto for cash, but you can choose to unlock the coins at any point. In return, you receive rewards on the locked crypto after a period of time—kind of like earning interest on a savings account.

Here’s a quick rundown of the staking process:

Choose a Proof of Stake asset coin: Not all cryptocurrencies can be staked. You’ll need to pick one that operates on a proof of stake (PoS) blockchain.l
Lock up your coins: You can stake your coins through a crypto exchange (like Kraken), or by running your own validator node although this requires technical experience and large quantities of the staked asset.
Earn rewards: The respective blockchain will pay out rewards that will naturally compound unless you choose to unstake them.

The more cryptoassets you stake, the more rewards you can earn. However, it’s important to understand that while you are earning more of a particular cryptoassets, the value of the crypto could drop in terms of Pound Sterling whilst it is locked up. This would mean you could end up losing money, in terms of pounds, during the staking process even while accumulating more cryptoassets. For this reason, it’s important to do your own research and consider the assets you stake to be ones you have confidence in long term.

How Much Can You Make By Staking Crypto?

The amount you can earn through staking depends on several factors:

The coin you stake: Some offer higher rewards than others.
The staking duration: Rewards are typically paid out every couple of days
Network conditions: If demand for staking increases, returns may decrease.

How to Earn Passive Rewards With Crypto Staking

If crypto staking seems like a good fit for your investing goals, here’s a step-by-step guide to passively grow your portfolio through crypto staking.

Step 1: Sign up to an exchange that supports staking

First, you’ll need to register with a cryptocurrency exchange that offers staking services. Some of the most popular options include:

Kraken: Secure and versatile exchange, with 24/7 customer support. Provides flexible staking options.
Binance: Offers staking on multiple cryptocurrencies with competitive APYs.
Coinbase: Beginner-friendly, but fees can be higher.

If you’re a bit stuck, here’s a useful guide about what to look for in a crypto trading platform.

After reviewing several different options, Kraken stands out as the best exchange to staking crypto because it offers nearly 20 different crypto assets that can be staked and unstaked at any time.

Step 2: Invest in a crypto that can be staked

Once your account is set up, you’ll need to buy a proof-of-stake cryptocurrency. Some of the most popular coins that can be staked include:

Ethereum (ETH) – 4-6% APY
Polkadot (DOT) – 12% APY
Solana (SOL) – 6% APY
Tezos (XTZ) – 5% APY

Do your research before choosing a coin. Look at its staking rewards, stability, and future potential.

Remember, once you stake your coins, there might be an unlock period of time before you can get them back if you would like to sell them. If the price of the crypto drops whilst it is locked up, you could lose money in terms of pounds sterling. To minimize this risk, you could opt for a coin that offers a short lockup period.

Step 3: Lock your crypto up in a staking pool

Instead of staking alone, most investors join a staking pool, which allows multiple people to combine their resources to increase rewards.

You can do this through your crypto exchange’s staking feature, or by using a dedicated staking wallet like Ledger or Trezor.

Other Ways to Earn Crypto

Crypto staking isn’t the only way to passively grow your crypto portfolio. Here are a few alternative methods:

Crypto mining

Traditional crypto mining involves solving complex mathematical problems to validate transactions on a blockchain.

While it can be profitable, it requires expensive mining equipment and high energy consumption.

Yield farming

Yield farming is a more advanced form of passive rewards where you lend your crypto to liquidity pools in decentralized finance platforms.

These pools provide liquidity for traders and, in return, pay out interest to depositors. Some platforms, like Aave and Compound, offer double-digit APYs.

Peer-to-Peer Lending

P2P lending allows you to loan out your crypto to other users in exchange for interest.

It’s similar to a traditional loan but operates on blockchain-based platforms like BlockFi and Nexo.

Each of these options comes with different levels of risk and reward, so choose one that aligns with your financial goals.

Get Paid in Crypto

As crypto becomes more accepted universally, expect to see employers integrate crypto into payroll options. Many tech companies, including Kraken, XX and XXX, allow their employees to be paid a portion of their salary in crypto rather than fiat currencies, such as Pounds. If this is of interest, speak to your company’s HR and Finance team about these options.

A Bit About Tax

Before you go ahead and start staking your crypto, it’s important to understand that crypto rewards are subject to income tax.

This means that you will have to report your staking rewards to HMRC and pay the applicable tax on any rewards that you earn.

You can read more about tax on cryptocurrency here.

Final Thoughts

Crypto staking is one of the more accessible ways to passively grow the size of your crypto portfolio. It requires minimal effort—just buy, stake, and let your rewards accumulate over time.

While it may not make you a millionaire overnight, it’s a fantastic way to grow your crypto holdings while supporting blockchain networks. And with options like staking pools and flexible staking, you don’t need to be a tech expert to get started.

Just remember to: