Staking works like this. Some crypto networks let you lock up coins you already own, so that those coins help keep the network running and keep it honest. In return, the network pays you. It pays you in more of the same coin.

The payment is almost always advertised as a percentage a year. You will see it called a staking yield, a staking reward, or an APY, which is short for annual percentage yield: the rate you would collect over a year if nothing changed.

Here is the part that catches people out. That percentage counts coins, not dollars.

Say you own 100 coins and the advertised rate is 5% a year. If the rate holds for the year, you finish it owning 105 coins rather than 100. Whether 105 coins is more money than 100 coins were depends entirely on what a single coin is worth at the end, and the yield figure tells you nothing whatsoever about that. The two numbers move independently of each other. A yield can be paid in full, on time, every week, while the coin it is paid in is worth a good deal less than it was.

None of that is a reason to avoid staking. It is a reason to stop reading the percentage as though it were a return.

There are three answers, and which one applies matters far more than how big the number is.

One: the network creates them. This is how most staking rewards are paid. The network mints brand new coins and hands them to the people who staked. Nobody paid for those coins. Everyone who holds the coin and did not stake now owns a slightly smaller slice of a slightly larger pie. If the total number of coins in existence grows by roughly the same percentage you earned, your share of the whole finishes about where it started. You have more coins and the same slice.

Two: people paid fees to use the network. Some rewards are funded by the fees users pay when they do things on the chain, such as sending a transaction or using an application built on it. That money comes in from outside, from people who wanted something the network does. A yield funded this way is tied to whether anybody is genuinely using the thing.

Three: somewhere else. This is the category worth slowing down for. A high advertised rate that is not covered by new coins and is not covered by real fees is still being paid by something. Sometimes that something is a treasury that will run dry, sometimes it is a marketing budget, and sometimes it is the money put in by the people who arrive after you.

Those three look identical on the advertisement. They are completely different things.

Two places, and both of them are published.

CryptoGrade scores every asset it rates on six inputs, each weighted, adding to 100. The heaviest of the six is Tokenomics and Value Accrual, at 28 of those 100 points. That input is where the questions in the section above get asked: where new coins come from, who receives them, and whether owning the coin gives you any claim on what the network actually earns. A yield lives inside the heaviest part of our score, not off to one side of it.

Alongside the weighted score, our framework runs nine pass or fail screens. One of them is named for exactly this problem, and here is its name word for word as we publish it:

A screen is not a score. It does not add points or subtract them. It fails or it does not, and a failed screen places an asset in our F grade at any score at all, including a score high enough to otherwise earn our top grade.

We are not saying anything here about any particular coin. The point is narrower and more useful than that: in our framework a yield is treated as a question about where the money comes from, never as a feature to be ranked by size. You can read both the six weights and all nine screen names yourself on our framework page.

1. What the coins you earn will be worth. Covered above, and it is the big one. The rate is a count of coins. The price is a separate question that the rate does not address.

2. Where the coins came from. Also covered above. New issuance, real fees and somebody else's deposits all print the same percentage on the same page.

3. Whether you can get out. Many networks have a lock-up, often called an unbonding period: once coins are staked, it can take days or sometimes weeks before you are able to sell them again. The price can move a long way inside that window, and while it is moving you cannot act.

4. What can be taken off you. On some networks, the computer doing the staking work (a validator) is punished if it goes offline or breaks the rules, and the punishment is that part of the stake it holds is destroyed, including the part that is yours. That penalty is usually called slashing. Separately, if you stake through an exchange or a staking service rather than running your own validator, that company takes a cut of the reward and holds your coins while they are staked, which is a different set of things that can go wrong.

One more point that is not about what the yield hides but about the number itself: an advertised rate is usually not a fixed rate. Most staking rewards float. They move with how many people are staking, how busy the network is, and what the network's own rules say. A rate you read today is a rate today.

That last question is most of fundamental research squeezed into one line. If the answer is no, then the yield was doing the deciding, and the yield is the part of the picture that can change next week.

Erik Suhonen, CryptoGrade's co-founder and chief executive, wrote a full guide to staking in 2026 and what the yield really is. It is longer than this piece and it goes further into the mechanics. It is published here:

https://blog.cryptograde.ai/p/the-low-effort-guide-to-staking-in-2026-and-what-the-yield-really-is

We publish a letter grade and a score for crypto assets, built from the six weighted inputs above and the nine screens that sit alongside them. Every grade answers one question on one absolute scale: how favorable an asset's evidence is for risk adjusted return, with the fundamental and market evidence shown. A yield is one piece of that evidence. It is never the whole of it, and an attractive yield does not carry an asset on its own.

If you want to be told when our grade on an asset changes, that is what CryptoGrade Alerts is. You pick the assets you care about and the alert is tied to our letter on one of them moving. It is free with a free CryptoGrade account.

Create a free account here. An account also opens the input scores behind every grade we publish, and our ranking past the top 10.

All weights, screen names, grades and bands above are CryptoGrade's own published framework, and they can change.

CryptoGrade publishes investment research, asset grades, scores and ratings. Nothing here is individualized investment advice, and no one at CryptoGrade is a registered investment adviser or broker-dealer. Invest wisely with AI-powered crypto scores and guidance.