Staking Risks

Staking is not risk-free yield — slashing, smart contract bugs, lockups, depegs, and regulatory changes can hurt returns or trap capital.

Validator misconfiguration can trigger slashing. Smart contract bugs in liquid staking or restaking protocols have caused losses. Client software bugs affect correlated operators — diversification across client implementations reduces but does not eliminate this risk.

LST depegs during liquidity crises reflect redemption uncertainty, not always lost underlying stake. Exit queue delays appear when many validators unstake simultaneously. U.S. SEC treatment of some staking products as unregistered securities has already pushed exchanges to restrict services.