As staking has become a new trend in the crypto industry, it’s important to mention the risks associated with cryptocurrency staking.

1. Slashing risk

When your validators break the rule, they will get punished by the network, which is also known as slashing.

Slashing can happen in several cases, such as when liveness fault, security fault, or governance fault happens.

2. Risk caused by unstable node operation

The ledger nodes involved in the operation have higher requirements for equipment operation and maintenance. They must be kept online 24/7 to handle emergencies.

If the node’s own technical level is not enough, it is prone to block loss and double signing and will be subject to the Slashing penalty from the project side. Some penalize the nodes, some penalize the users and affect the reward of the stakers.

3. Risks associated with the token price and related project

Staking coins in a bound wallet has one drawback: The risk of weakened liquidity. POS projects basically have a lock-up period ranging from 20 days to a few months. Even if you redeem the tokens, you will not be able to trade during the lock-up period, and you may face big fluctuations in the token price. If you are unable to participate in the transaction in time, you will incur opportunity costs.

This may not be a problem when the value of the token rises, but it can lead to losses when the price falls. The amount earned through pledge may not be sufficient to cover the price devaluation during the bear market.

On the other hand, staking is more suitable for long-term HODLers. If you are a frequent trader, the longer lock-up period is not suitable for you. At the end of the day, whether you choose staking or not solely depends on your own investment style.

Got questions in staking? Subscribe to Staking NewsBites, a bi-weekly newsletter run by InfStones and learn more about staking, blockchain and the crypto world.

About InfStones

InfStones is built by senior cloud service and blockchain teams in Silicon Valley, USA. It has super nodes elected in well-known DPoS public chains including EOS, TRON, VeChain, Ontology, Elastos, IoTeX, Loom, GXChain, Bytom, etc., and mining nodes deployed in well-known PoS public chains including IRISnet, Cosmos, Tezos, Algorand, IOST, etc.

According to Staking Reward’s ranking of Digital Asset Staking Services, InfStones ranks the 3rd in the world. It is the super PoS mining pool that covers the vast majority of PoS mainstream public chains.

If you have any question or suggestion, please feel free to contact us at