Mentioned in This Article
1. How does staking crypto work, and where you stake matters
Staking crypto through an exchange, a self-custody wallet or an exchange-traded product leads to very different outcomes, even though the underlying blockchain pays the same reward on each path. In a November 5, 2026 edition of its advisor newsletter, an industry analysis showed that exchanges commonly keep 25% to 35% of staking rewards, while self-custody services take 5% to 15% and staking ETP sponsors typically retain 5% to 25%.
Staking means locking up a proof-of-stake token, such as Ether (ETH) or Solana (SOL), to help validate transactions on its network. Because validation underpins the security of the chain, the protocol pays holders a reward for committing their tokens. The rate varies by blockchain and moves with network activity and with how many holders choose to stake.
For financial advisors, the practical question is therefore less about whether staking pays and more about which route to exposure leaves clients with the largest share of the reward, with the least operational burden, and with the fastest route back to cash.
2. What are the three ways to hold staked assets?
Investors can reach staking rewards in three main ways: through an exchange-traded product, through an exchange account, or through a wallet they control themselves. The newsletter compares them on three measures: operational complexity, how much of the reward reaches the investor, and how quickly the position can be turned into cash.
The comparison is useful because each measure pulls in a different direction. The simplest options tend to leave a larger share of the reward with an intermediary, while the options that return most of the reward ask the investor to take on technical and custody responsibilities. No path is best on all three counts, and the right choice depends on the client and the size of the position.
3. Which staking route is the simplest to operate?
An exchange-traded product is the least demanding. The investor buys shares in an ordinary brokerage account, and the product's sponsor chooses the staking provider, so the investor never manages keys, validators or transactions. An exchange is nearly as easy, often requiring only an account setting, though the exchange controls the process from end to end.
Self-custody is the most work. The investor must secure their private keys, select a staking provider, approve transactions, pay staking and unstaking fees, and monitor the position over time. Each of those steps introduces a possible point of failure, and mistakes can be costly and difficult to reverse.
Operational risk does not disappear when a product handles the work. It shifts to the sponsor or the exchange. Advisors evaluating a product should ask how its validators are chosen and monitored, because the quality of that selection affects both rewards and the risk of penalties.
4. Who keeps the staking reward?
The protocol pays the same gross reward whichever route an investor uses. What changes is the portion passed through to the client after the intermediary takes its share. Exchanges commonly retain roughly 25% to 35%, and sometimes more. Investors who use a staking service from a self-custody wallet typically give up about 5% to 15%. Sponsors of staking ETPs usually retain between 5% and 25%.
Advisors are encouraged to ask for the net figure rather than the headline rate. For ETP investors there is an additional check: the share of the fund's tokens that is actually staked. That proportion varies from product to product, and tokens that are not staked earn nothing, so a fund that stakes only part of its holdings will deliver a lower effective reward than its gross rate suggests.
5. Why does the reward split exist at all?
Every intermediary in the chain performs a service and expects to be paid for it. An exchange runs the validator infrastructure, handles the technical risk of penalties and offers the convenience of a single account, and it recovers the cost of that service, plus a margin, by keeping part of the reward. A staking provider used with a self-custody wallet performs a narrower job, running or coordinating validators while the client holds the keys, and charges accordingly. An ETP sponsor bundles staking into a regulated product and retains a share to cover costs and profit.
Understanding that structure helps advisors compare options on equal terms. A lower retention is not automatically better if it comes with duties the client cannot or should not carry, and a higher retention is not automatically worse if it buys simplicity, regulatory oversight or faster liquidity. The point of asking for the net figure is to make the price of those features visible, so that the decision rests on a number rather than on an advertised rate.
6. What does the reward look like on $100,000?
The newsletter gives a worked example. On $100,000 staked at a 2.5% gross rate, the position earns $2,500 a year before any intermediary takes a share. With a 5% retention, the investor keeps about $2,375. With a retention of 25% to 35%, the investor keeps roughly $1,625 to $1,875.
Because staking rewards are paid in the staked token, the value of what a client receives also depends on the token's price, which can rise or fall by far more than the reward itself. A 2.5% gross reward is small relative to the price swings that Ether and Solana have shown in past years, so staking is better understood as a way to earn additional units of an asset an investor already wants to hold than as a stable income stream. That context matters when advisors set expectations with clients who are used to fixed-income yields.
The difference between the best and worst cases in that example is about $750 a year on a $100,000 position, a gap that grows with the size of the holding and compounds over the time the position is held. The figures assume that all of the assets are staked. In practice the staked share varies by issuer and changes over time, and assets that are not staked earn no reward at all.
7. How quickly can staked assets be sold?
Liquidity is the third point of comparison, and here the ETP has a clear advantage. Shares of an ETP can be sold at any time the market is open, with settlement on the next business day, and that remains true however much of the fund's holdings are staked.
Tokens staked directly, whether on an exchange or in a personal wallet, must first be unstaked before they can be sold. The unstaking period depends on the blockchain and can range from no delay at all to several weeks. Some exchanges offer flexible staking products that allow faster access, but they generally pay lower rewards in exchange for that flexibility.
Advisors should also keep the two steps separate in their minds. Selling a token and completing the unstaking process are distinct actions, and a client who needs cash on short notice may find the second one to be the bottleneck.
8. What risks should advisors ask about?
In the newsletter's expert section, Waseem Salim, chief executive of Valdora, described the trade-offs between approaches. Native staking gives control and the choice of validator but is slower to unstake. Liquid staking adds flexibility but brings smart contract and liquidity risks. Exchange staking is the easiest but requires trusting a third party. The key questions, he said, are where the assets sit, who controls them and how quickly they can be accessed.
On custody, delegation and lockups, Salim advised starting with who controls the assets, who can move them and what happens if something fails. Pooled delegation spreads exposure, but the way it allocates stake should be understood. A liquid token, he noted, does not mean immediate withdrawal.
On liquid staking, he said smart contracts add a layer of risk that can affect deposits, rewards and withdrawals, and that audits cannot remove all of it. Investors should check who can upgrade the contracts, how funds are managed and what safeguards exist, and should judge security by how it works in practice.
On the due diligence needed to guard against validator slashing, the penalty a network can impose on validators that misbehave or fail, Salim said selecting a validator is a form of risk management. He recommended looking beyond uptime and track record to infrastructure management, monitoring, failure response, concentration across validators, governance of delegation and the process for replacing a validator. A clean record, he cautioned, does not guarantee future results.
9. What is the takeaway for client portfolios?
The newsletter's conclusion is that the reward is identical on every path, while the work required, the share retained by the provider and the speed of sale differ. A staking ETP is positioned as a distinct option, one that offers brokerage-account convenience and next-day settlement.
Another consideration is how a provider's practices change over time. Retention levels, the portion of assets that is staked and unstaking terms are set by the provider and can be revised, so a comparison made at the time of purchase may not hold a year later. Advisors who review staking exposure on a regular schedule, rather than only at the point of investment, are better placed to notice when a product's economics have drifted away from what the client was originally promised.
The practical implication is that the decision should be documented. When an advisor recommends one route over another, a short record of the net reward, the unstaking period, the custody arrangement and the provider selection process gives the client and the firm a clear basis for the choice, and it makes later reviews easier if any of those terms change.
For advisors, that framing converts a technical decision into a familiar one: compare net cost, understand where operational and counterparty risk sits, and match liquidity to the client's needs. As staking becomes a more common feature of digital-asset allocations, the questions raised here, about net yield, the staked percentage of a fund and unstaking timelines, are likely to become standard parts of product due diligence.