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As more blockchain protocols adopt proof-of-stake (PoS) consensus models, staking has emerged as a critical concept for institutions entering the ecosystem. But what does staking actually mean? And what should institutional teams know before participating?
For asset managers, crypto funds, and other professional allocators, staking is no longer a fringe activity, it’s becoming an operational necessity. This blog offers a foundational guide to staking through an institutional lens and explores how infrastructure providers like Finoa Consensus Services (FCS) make it easier to participate with assurance.
Understanding staking in proof-of-stake blockchains
Staking is the process of actively participating in the consensus mechanism of a PoS blockchain. In these systems, validators are selected to propose and verify new blocks based on how many native tokens they’ve “staked” ,that is, committed to the network as collateral.
Unlike proof-of-work (PoW) systems that rely on energy-intensive mining, PoS allows for greater scalability and efficiency. Staking supports network security by aligning incentives: participants have “skin in the game” and risk losing a portion of their stake (called slashing) for malicious or negligent behavior.
How staking works:
At a high level, staking involves three components:
- Token ownership: You must hold an amount of a protocol’s native token.
- Validator infrastructure: Tokens are either delegated to or run by validators who perform block production and attestation.
- Reward distribution: If the validator performs its duties correctly, protocol-level rewards are distributed to participants.
In many PoS chains, institutions can either run their own validator infrastructure or delegate tokens to a trusted third-party validator like Finoa Consensus Services.
Earning rewards through staking
Staking rewards are typically issued by the protocol itself as part of its native tokenomics. These rewards serve two main purposes: incentivizing participants to secure the network and compensating validators for the computational and operational effort involved in maintaining uptime and processing transactions.
Some protocols, such as Ethereum, pay validators with a combination of newly issued ETH and execution-layer rewards. The protocol issues new ETH on the consensus layer as a staking reward, with the issuance rate tied to the amount of ETH staked. However, validators' total earnings also include rewards from the execution layer, such as priority fees (or tips) from users and Maximal Extractable Value (MEV). This is a crucial distinction, as the base fee of every transaction is burned, meaning it is permanently removed from circulation. This unique tokenomic model means that while new ETH is issued to reward validators, the network's overall supply can be either inflationary or deflationary depending on network activity.
Established protocols like Solana combine network issuance with a portion of transaction fees to reward validators. However, Solana’s initial fee structure was relatively modest, meaning that historically, the majority of staking rewards have come from newly issued tokens. This dynamic is now shifting.
Newer protocols, such as Celestia and Saga, have often integrated long-term ecosystem incentives to support early participation, and their continued high staking rewards reflect this incentive model.
While staking reward rates fluctuate based on network activity, token issuance, and validator performance, current protocol-level APYs as of August 6, 2025, are as follows, based on publicly available data:
- Nillion: 22.40% APR
- Celestia: 10.24 APR
- Solana: 7.56% APY
- Ethereum: 2.99% APR
These figures are dynamic and subject to change based on network governance decisions, validator performance, and broader market conditions. Institutions must evaluate rewards in the context of operational risks, slashing penalties, and custody frameworks.
Why staking matters for institutions in 2025
As of this year, nearly 75% of the top 100 protocols by market capitalization use PoS or delegated PoS consensus models. Institutional allocators are under pressure to understand how these protocols operate, not just from a tokenomics perspective but from a network participation point of view.
Staking is more than a reward mechanism; it's a strategic lever that can offer:
- Governance alignment: Stakers often receive voting rights on network decisions.
- Operational insight: Running or delegating to a validator provides exposure to how networks evolve over time.
- Ecosystem credibility: Active participation in consensus signals long-term commitment to blockchain ecosystems.
Risks and responsibilities of staking
While staking supports network security and offers potential rewards, it also carries operational risks:
- Slashing: Penalties for validator misbehavior can reduce your staked balance.
- Downtime: Validators must meet uptime and performance thresholds or risk being penalized.
- Custodial complexity: Depending on how tokens are held, institutions must ensure staking workflows don’t compromise their security policies.
This is why choosing a reliable infrastructure partner is critical.
Finoa Consensus Services: Staking infrastructure with institutional assurance
Finoa Consensus Services is purpose-built to support institutional staking. Operating bare-metal servers in Germany with 24/7 monitoring, FCS ensures maximum control, security, and transparency. Our infrastructure spans leading PoS networks including Ethereum, Celestia, and Saga, among others.
We specialize in supporting institutions who require:
- Secure, isolated infrastructure
- Dedicated validator access
- Deep operational monitoring and uptime reporting
Whether you’re exploring self-custody or in-custody staking, FCS provides the technical backbone to help you engage with blockchain protocols responsibly and at scale.
For more details on how institutional clients can stake directly from self-custody environments, explore our preview article on our soon to launch Stake Desk.
Your staking journey starts with the right knowledge
Staking isn’t just for early adopters, it’s a foundational pillar of blockchain participation for institutions. As more protocols adopt PoS and as institutional exposure increases, understanding staking is no longer optional.
Finoa Consensus Services is here to help you navigate this evolution with confidence. Whether you’re evaluating your first validator or scaling across multiple networks, we offer the infrastructure and expertise to support your journey.
Want to learn more about staking for institutional participants?
Explore our staking services or reach out to us for a conversation on how FCS can help you participate securely.
This content is for educational purposes only and does not constitute financial or investment advice. Always do your own research before engaging in any blockchain or staking activity.