Losing money while staking is possible in several scenarios and can be driven by FOMO or a software error. A bug in the protocol code could lead to hackers taking investors' funds, especially if the network is new and without major industry backing. Furthermore, when a token value sharply decreases, investors can experience FOMO and sell their tokens at a loss. Staking participants  can lose money when the token value decreases . Several upcoming projects promise high yields without having a large distributed token supply. As the market floods with new tokens, the value of the token decreases, meaning users are suffering a capital loss on their investment. Investors will need to record their crypto gains and losses via staking for tax purposes.