Ethereum uses Proof of Stake. Validators lock up ETH to process transactions — they earn new ETH as a reward (currently ~4.2% APY). You're essentially getting paid to secure the network. The more ETH staked, the lower the yield (and vice versa).
Solo staking requires 32 ETH (~₹1.1 crore) — impractical for most. Lido lets you stake any amount. You deposit ETH, get stETH (a token representing your staked ETH + rewards). stETH can be used in DeFi while still earning the 4.2% staking yield. Easiest option.
Buy ETH on CoinDCX → withdraw to MetaMask → go to lido.fi → stake. Your stETH earns ~4.2% APY, compounded daily. Staking rewards are taxed as income at your slab rate in India. Track rewards in Koinly for ITR purposes.
Main risk: ETH price volatility (the staking yield is in ETH, not rupees). Smart contract risk with Lido is low — it's the most audited protocol in DeFi with $35B staked. For long-term ETH holders, staking is almost always better than just holding idle.
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