In return for helping secure the network, stakers can receive staking rewards. Rewards are primarily distributed by the protocol through new issuance of its native tokens. Protocols also distribute all or a portion of the transaction fees paid by users.
Staking reward rates are variable rates. They will constantly change over time, in most cases depending on how much of the protocol’s tokens are staked (also known as the staking ratio). Therefore, stakers’ realized rewards can be different from the expected rewards shown at the time of staking.
What are the risks to staking?
By staking, stakers are exposing themselves to penalties and slashing. In severe cases, slashing could lead to a staker to lose their entire staked assets. Therefore, in-depth due diligence of validators is strongly advised. Diversifying your risk by delegating to more than one validators’ is also recommended.