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What Is the Counterparty Risk When Using a Centralized Exchange for Staking?

Using a CEX for staking introduces counterparty risk; the user loses custody, risking asset loss if the CEX is hacked, insolvent, or malicious.
Greeks.Live29.10.25

What Is the Counterparty Risk When Using a Centralized Exchange for Staking?

When staking through a centralized exchange (CEX), the user gives up custody of their private keys, creating custodial risk. The CEX becomes the counterparty.

If the CEX is hacked, becomes insolvent, or acts maliciously, the user's staked assets may be lost, regardless of the underlying network's security. This is a significant single point of failure.

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