Can you lose your crypto by staking?

Yes, you can lose your crypto by staking, but it helps to separate two kinds of loss. One is ending up with fewer coins than you started with. The other is ending up with the same coins worth less. The general risk list is in is staking crypto safe.

Can you lose your coins, not just their value, by staking?

• Slashing. Coinbase's help pages say protocol penalties can cost some or all of your staked crypto. Coinbase says it reimburses penalties caused by its own or its validators' mistakes, but not losses from a hack, a protocol bug or your own actions. The mechanics are in what is slashing in crypto.
• A failed custodian. When a company stakes or lends your coins for you, you rely on its terms. In January 2023, a US bankruptcy judge ruled that about $4.2 billion in Celsius Earn accounts belonged to the Celsius estate, not to roughly 600,000 account holders, because the terms of use had transferred ownership. Those customers became creditors. The background is in what happened to Celsius.
• Smart contract failure. Pooled and liquid staking rely on code that can contain bugs, a risk Coinbase also excludes from reimbursement.

Some networks remove the first risk. The Essential Cardano FAQ says delegated ada does not leave your wallet and is not at risk of being slashed. The main downside it lists is a pool that underperforms and pays fewer rewards.

Can you lose money staking even if nothing goes wrong?

Yes. Rewards are paid in the coin being staked, so a price fall can outweigh them. Coinbase says rewards are not guaranteed and can be zero, and that its fee may change.

Lockups make this worse. Coinbase says staked funds cannot be sold or sent until unstaked, which can take from a few hours to a few weeks, and the price can move a lot in the meantime.

What are the main liquid staking risks?

Liquid staking hands you a receipt token you can sell instead of waiting, as explained in what is liquid staking. The catch is that the market sets its price.

In June 2022, Lido's stETH fell to about a 6% discount to ETH over one weekend, CoinShares reported. At that time Ethereum did not allow staking withdrawals, so nobody could redeem stETH for ETH to close the gap. Holders who needed to exit had to sell at a loss, even though the ETH behind the tokens was still there.

How does the unstaking period affect losses?

The unstaking period does not take coins away, but it removes your ability to react. Coinbase says many protocols set fixed unstaking periods, and that for Ethereum the timing depends on network conditions and is not guaranteed. Coins that cannot be sold during that wait take the full effect of any price fall.

Crypto prices are volatile, and staking does not remove the risk of loss.