Staking lockup risk: why staked crypto is stuck
Staking lockup risk means staked crypto cannot be sold during unbonding, so its price can fall before the network releases it. The wait varies by network.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
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- Unstaking starts a queue, and the wait can change.
- A sharp price drop while locked is the main risk.
- Slashing or downtime can cut the staked balance.
Staking means depositing crypto with a validator that helps run a proof-of-stake network. The network chooses validators by how much crypto they hold.
How does crypto staking lockup work?
When you unstake, the network does not return your crypto right away. Your request joins an exit queue, and the wait differs by network and can change. Ethereum enabled staking withdrawals in April 2023.
Why do networks lock staked crypto?
Proof-of-stake networks make validators put up crypto as collateral. The lockup secures the network and stops instant exits, so the network can punish bad validators.
What risks happen during lockup?
The main risk is a sharp price drop that you cannot answer by selling. Other problems can add losses while you wait.
- Price falls while you cannot sell.
- Slashing can remove part of the stake.
- Downtime can lower rewards.
- Protocol changes can alter withdrawal terms.
How is liquid staking different?
Liquid staking gives you a token that stands for your staked crypto. You can trade it instead of waiting in the exit queue. It avoids the unbonding wait, but adds smart contract and depeg risk. A depeg is a drop below the coin behind it.
Frequently asked questions
No, not all. Many use a lockup because the network needs time to settle exits.
Usually not. The exit queue is generally irreversible, so check the terms before you confirm.
No. It removes the unbonding wait, but you still depend on the protocol's contracts and on buyers for the token.
Usually not. Rewards stop when your crypto leaves the active validator set.
