What is the main difference between staking and lending?

Staking secures a PoS network and pays protocol rewards. Lending supplies assets to a lending market where borrowers pay interest; rates depend on utilization and market demand.

Staking is generally simpler, but still involves validator and smart-contract risk (especially with liquid staking). Lending adds counterparty and liquidation risk if collateral value falls.

Can I be liquidated when lending?

Lenders are not liquidated; borrowers are. However, lenders face smart-contract risk and market shortfalls if bad debt appears.

When should I choose lending over staking?

Choose lending if you want flexible liquidity, variable rates tied to demand, and the ability to borrow against collateral. Choose staking for simpler, long-term yield on assets you already plan to hold.

Staking vs Lending in 2025

Both strategies can generate on-chain income, but they differ in mechanics, risk, and how your assets are used. Use this side-by-side to pick what fits your goals.

At a Glance

Aspect	Staking	Lending
How it works	Delegate or lock tokens to secure a PoS chain and earn protocol rewards.	Supply assets to pools; borrowers post collateral and pay interest.
Typical APY	~3–8% on major L1s (varies by chain/validator).	Highly variable; depends on utilisation and incentives.
Complexity	Lower — set-and-compound.	Moderate — understand collateral factors, borrow caps, rate modes.
Key Risks	Validator slashing, downtime, smart-contract risk (liquid staking).	Smart-contract risk, bad debt, oracle failure; borrowers face liquidation.
Liquidity	Native staking may result in lockups; liquid staking (e.g., stETH) offers added flexibility.	Usually liquid for suppliers, but markets can pause/slow withdrawals in stress.
Best For	Long-term holders seeking simpler, predictable yields.	Users wanting flexible deposits, borrow-against-collateral, or rate opportunities.

Example Platforms

How to Choose

Time horizon: Long-term conviction on an asset → staking; active rate-hunting or borrowing needs → lending.
Risk tolerance: Lending can face market shortfalls in extreme stress; staking can face slashing.
Utility: Lending enables collateralized borrowing; staking strengthens network security.
Costs: Consider gas, validator fees/commissions, and potential borrow interest if you use leverage.

Risk Management

Diversify validators/markets; avoid unaudited contracts.
Mind collateral factors and liquidation thresholds when borrowing.
Prefer conservative LTVs and enable alerts for price/oracle moves.
Use hardware wallets and follow key-management best practices.

Our Verdict

If you want simpler, protocol-native rewards on assets you already hold, staking is the cleaner baseline. If you need flexibility or want to borrow against holdings, lending adds utility — with risks that require monitoring and discipline.

FAQ — Staking vs Lending

Are staking rewards fixed?: No. They depend on network parameters, inflation schedules, and validator performance.
Do lenders earn while borrowing too?: You earn on supplied assets and pay on borrowed assets; the net result depends on rates and incentives.
What happens if a lending market accrues bad debt?: Protocols may use safety modules, insurance funds, or auctions. In severe events, suppliers can face shortfalls.
Can I combine both?: Yes. Many keep a staking core for baseline yield and use lending opportunistically or for short-term liquidity.