Investors are constantly exploring strategies that maximize long-term gains while minimizing risk. Two of the most talked-about passive investment strategies are staking and holding (HODLing). While both can be profitable, they serve different purposes, risk appetites, and market conditions.

With the rise of Ethereum 2.0, liquid staking derivatives, and native staking options across various chains, the debate has only intensified: which one truly wins in the long run?

What Is Holding (HODLing) in Crypto?

Holding—often humorously referred to as “HODLing”, is the practice of purchasing a cryptocurrency and keeping it untouched in a wallet over an extended period. The term originated from a 2013 Bitcoin forum post misspelling “hold” and has since become a rallying cry for long-term investors.

Why Investors HODL:

• Simplicity: No need for technical setups, smart contracts, or validator requirements.

• Market Growth Exposure: You benefit directly from price appreciation.

• Long-Term Belief: HODLers typically believe in the project’s fundamental value.

Example: A Bitcoin holder from 2015 who simply held their coins saw astronomical returns, far surpassing many complex strategies.

What Is Staking in Crypto?

Staking is the process of locking up a cryptocurrency in a blockchain network to support operations like validating transactions and securing the network. In return, participants receive staking rewards, often in the form of the same token.

Types of Staking:

• Direct staking: Delegating tokens to a validator (e.g., Cosmos, Solana).

• Liquid staking: Staking while still using derivative tokens (e.g., Lido’s stETH).

• Exchange staking: Simplified staking via centralized platforms like Binance or Coinbase.

Benefits of Staking:

• Earn Passive Income: Yields vary between 4% and 15% APR depending on the coin.

• Network Participation: Helps maintain and secure the blockchain ecosystem.

• Compounding Returns: Reinvesting rewards can grow wealth over time.

Comparative Analysis: Which One Wins Long-Term?

Let’s compare staking and holding across several crucial factors:

Recent Trends and Industry Shifts

Ethereum’s Staking Boom

With Ethereum’s transition to Proof-of-Stake completed in 2022, staking ETH has become a mainstream strategy. As of June 2025, over 32 million ETH is staked, representing 27% of the total supply. This indicates growing institutional and retail trust in staking protocols.

Liquid staking protocols like Lido and Rocket Pool now dominate DeFi TVL rankings. According to DefiLlama, liquid staking accounts for over $40 billion in locked assets, showing how staking can be flexible and profitable.

Regulatory Concerns

Staking has also drawn regulatory scrutiny, especially in the U.S., where the SEC fined Kraken in 2023 for its staking-as-a-service program. As a result, platforms like Coinbase have lobbied for clear staking regulations. HODLing, by contrast, remains largely unaffected by regulatory uncertainty.

Ethereum, Solana, and the Rise of Reward-Powered Staking

One of the clearest signals of staking’s dominance comes from Ethereum’s post-merge activity. Since the network fully transitioned to Proof-of-Stake in September 2022, staking has grown rapidly. As of June 2025, over 32 million ETH, worth approximately $112 billion, is actively staked, according to BeaconScan.

Similarly, Solana’s staking ecosystem has surged after recovering from network disruptions in 2023. With over 68% of SOL’s total supply staked, validators now offer 6–8% APR. Institutional players like Jump Crypto and Coinbase Ventures have poured funds into Solana validators, signaling deep belief in staking’s long-term viability.

This surge in staking shows how blockchain-native rewards can effectively compete with traditional yield mechanisms like bonds or dividend stocks.

The Bitcoin Counterpoint: HODLing Still Rules the King’s Throne

Despite staking’s growing popularity, Bitcoin remains the undefeated champion of the HODL strategy. With no native staking mechanism, Bitcoin’s design inherently encourages long-term storage. And it works, according to Glassnode, over 70% of BTC supply hasn’t moved in the past 12 months, signaling strong investor conviction.

Many BTC holders, especially institutional custodians like MicroStrategy, view Bitcoin as “digital gold” and prefer keeping it idle in cold storage to maximize capital gains.

Even celebrities and billionaires endorse this model. For instance, Michael Saylor’s MicroStrategy now holds over 226,000 BTC, worth more than $15 billion. His philosophy? “Bitcoin doesn’t need yield; the price appreciation is the yield.” This real-world HODL commitment offers a powerful lesson: in certain cases, patience, not passive income, wins the long-term race.

Which Strategy Is Better for You?

The choice between staking and holding depends on your investment goals:

• Choose HODLing if:

  • You’re risk-averse and prefer simplicity.

  • You believe in exponential long-term price growth (e.g., Bitcoin).

  • You want full liquidity at all times.

• Choose Staking if:

  • You seek yield and want to compound gains.

  • You understand smart contracts and blockchain mechanics.

  • You’re participating in proof-of-stake ecosystems like ETH, SOL, or ADA.

Investor Insight: Diversify Your Strategy

Why not both? Many seasoned investors split their portfolio:

• Stake a portion for yield (e.g., 30% of ETH via Lido).

• Hold a portion for price speculation and quick liquidity access.

This hybrid approach allows you to earn passive income without fully sacrificing liquidity or upside potential.

Conclusion: The Long-Term Winner Is Strategy-Dependent

In the long run, staking offers more consistent returns through yield but comes with technical and regulatory baggage. HODLing is simpler, more liquid, and may deliver higher gains in bull markets. Ultimately, the smartest strategy might be a balance between both, adjusting over time as market conditions shift.

FAQs: Staking vs. Holding in Crypto

What is the main difference between staking and holding?

Staking earns passive income by locking tokens to secure a blockchain; holding is simply keeping crypto long-term without rewards.

Is staking riskier than holding?

Yes, staking involves additional risks like validator slashing, smart contract bugs, or temporary token lockups.

Can I lose money while staking?

Yes, if the token’s market price drops significantly or if there’s a protocol failure, your staking returns may not offset losses.

Which is more profitable long-term: staking or holding?

It depends. In stable or sideways markets, staking may outperform due to compounding rewards. In bull markets, holding can yield higher capital gains.

Do I have to pay taxes on staking rewards?

In many countries, yes. Staking rewards are typically considered taxable income when received and capital gains when sold.

Glossary of Key Terms

Staking

The process of locking up cryptocurrency in a Proof-of-Stake network to earn rewards and support the network’s operations.

HODLing

A misspelled term for “holding,” referring to keeping crypto assets untouched over time, typically through market cycles.

APR (Annual Percentage Rate)

The yearly interest earned through staking, shown as a percentage.

Validator

A participant in a PoS blockchain responsible for verifying transactions and maintaining the network, often receiving staking rewards.

Liquid Staking

A method that lets users stake crypto while retaining liquidity through derivative tokens (e.g., stETH).

Cold Storage

Offline storage of cryptocurrencies to enhance security, commonly used by long-term holders.

Slashing

A penalty imposed on stakers or validators for malicious activity or downtime, resulting in loss of staked assets.

Yield Farming

A DeFi strategy where users earn rewards by providing liquidity or staking in various pools—distinct from traditional staking.

Proof-of-Stake (PoS)

A consensus mechanism where validators are selected based on the amount of crypto they stake, rather than mining power.

Sources and References

fortune.com

coindesk.com

cointelegraph.com

cryptorank.io