While Bitcoin holders earn nothing, Ethereum holders earn 4.2% per year just for staking. No trading, no DeFi risk. Just hold ETH, stake it, earn more ETH every day. Here's how to set it up.
Ethereum's Proof of Stake system pays validators (stakers) new ETH to process transactions. You stake ETH → earn ~4.2% APY paid in ETH → withdraw anytime. It's like a savings account but in ETH. The more ETH staked network-wide, the lower the yield (supply/demand of validators).
Lido Finance is the simplest way: deposit any amount of ETH (even ₹100) → receive stETH (liquid staking token representing your ETH + rewards). stETH earns 4.2% daily, rebaseing each morning. Use stETH in DeFi while still earning staking yield. Over $35B staked on Lido — the largest DeFi protocol.
Advanced users stack yields: Stake ETH → get stETH (4.2% APY) → use stETH as collateral on Aave → borrow USDC → supply USDC to Aave (7.8% APY). Net yield: 4.2% + portion of 7.8% = 8-12% combined. Higher reward = higher complexity and liquidation risk. Start with just the 4.2% staking first.
ETH staking rewards in India: taxed at your income slab rate (not the 30% gains rate) because it's "income from other sources." When you sell stETH for profit, that gain is taxed at 30%. Track staking rewards separately in Koinly — they have a different tax treatment than your ETH purchase gains. Always use Koinly.
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