Crypto doesn’t stand still; it evolves out of necessity.
Each time the industry hits an obstacle, developers and protocol designers innovate their way to a better solution for the crypto market.
For example, Bitcoin’s proof-of-work (PoW) consensus was an early innovation to solve the “double-spending” risk of someone spending the same money twice. The problem is, PoW is resource-intensive and doesn’t scale efficiently.
To overcome that limitation, developers introduced proof-of-stake (PoS) as a more energy-efficient and scalable consensus option for individual and institutional staking. In a simple PoS system, network participants commit, or “stake,” their tokens to help validate transactions and secure the network. In return, they earn rewards, much like interest on a savings account.
Staking’s growing role
Today, staking is much more than just an alternative consensus mechanism; it’s a core feature of modern blockchain networks that enables opportunities for individuals and institutional investors. As participation grows, so does the demand for robust staking infrastructure that balances decentralization, performance, and security.
However, just as PoW has its downsides, PoS isn’t perfect, either. PoS can increase centralization due to minimum staking requirements and some users’ ability to stake large amounts relative to smaller participants.
Algorand’s protocol uniquely solves the PoS centralization dilemma. Our Pure Proof-of-Stake (PPoS) model protects decentralization by selecting validators at random from the entire token-holding population, not just those with the most resources. PPoS has minimal environmental impact without sacrificing speed and security.
How custody relates to staking
Where staking leads, questions about custody naturally follow. If tokens are locked up to support the network, where exactly are they, who is holding them, and how secure are they?
In traditional finance, a bank or trust company often acts as a custodian, securely managing assets on behalf of clients to ensure safekeeping, compliance, and smooth settlement of transactions.
For blockchain networks, large token holdings (digital assets committed to staking) play a central role in supporting and securing the network. Whether through an integrated staking service or a third-party provider, network participants rely on these services to securely store and actively manage their assets, while ensuring they remain accessible.
For this reason, blockchains like Algorand work with trusted institutional-grade Web3 custody providers to ensure asset security, regulatory compliance, and operational integrity.
Hex Trust unlocks Algorand for staking
In July 2025, Algorand extended our agreement with Hex Trust to continue safeguarding the foundation’s digital assets. Building on a partnership that began in 2021, Hex Trust will now offer support for Algorand Staking Rewards, strengthening the staking infrastructure that supports institutional staking on the Algorand network.
Under the expanded agreement, the Algorand Foundation has made a custody allocation with Hex Trust. As the foundation’s regulated custody partner, Hex Trust will deliver institutional-grade asset protection through its fully licensed and compliant infrastructure.
Empowering institutional staking
Beyond custody, Hex Trust's expanded partnership now supports Algorand Staking Rewards. Staking on the Algorand blockchain is a fundamental aspect of its Pure Proof-of-Stake (PPoS) consensus mechanism, allowing participants to secure the network and earn rewards by staking Algo.
Hex Trust provides secure access to Algorand's Staking Pools, empowering institutional clients to engage in on-chain governance and generate rewards without compromising control, security, or compliance.
By combining robust custody solutions with accessible staking rewards, the expanded partnership between Hex Trust and the Algorand Foundation reinforces trust and paves the way for wider institutional adoption.
Learn more about staking
Take a deep dive and learn more about staking with the Algorand Complete Guide to Staking.
Learn how to stake your Algo to help secure the network and collect rewards. Our post Staking Rewards Have Arrived covers staking types, applications, ways to connect with our community, an extensive Staking FAQ, and more.
Disclaimer:
The information provided herein does not constitute investment advice, financial advice, trading advice, or any other sort of advice, and you should not treat it as such.
We do not recommend that any Algo or any crypto assets be bought, sold, swapped, staked, or held by you.
We do not broker trades on your behalf. The content herein may provide access to or link to third-party services in connection with the buy/sell and swap functionalities. When accessing third-party services, you understand that you are not transferring your assets to us.
We make no warranties or representations, express or implied, about linked third-party services, the third parties they are owned and operated by, the information contained on them, assets available through them, or the suitability, privacy, or security of their products or services. You acknowledge sole responsibility for and assume all risk arising from your use of third-party services, including risk of loss for assets trading through such third-party services. In no event will we be liable for any damages arising out of or relating to third-party services.