2020 was the year of Decentralized Finance (DeFi). Cryptocurrency staking played a huge role in the phenomenal growth of the new generation crypto assets. At the time when the total number of miners on proof-of-work (PoW) blockchains begin to dwindle (except for Bitcoin) slowly, the number of users staking their cryptocurrencies for earning fixed interest or yielding farming rewards increase.
In the Kraken platform itself, more than a billion dollars worth of cryptocurrencies is staked. Other major exchanges where huge amounts of cryptos are staked include Binance and Huobi. In January 2021, the total assets staked in DeFi platforms amounted to US$21-23 billion. The scope, platform, and expanse of crypto staking is increasing at a very fast pace. But what is it all about? Let’s explore more.
What Is Crypto Staking?
Staking of cryptocurrencies implies an activity where a user holds his crypto funds in a wallet (hot or cold) and also participates to maintain the operations of a proof-of-stake (PoS)-based blockchain system. This is a very similar system to crypto mining in the sense that it helps the network in achieving consensus as the users participating get rewarded.
In the staking process, the right of validating transactions involves the number of digital coins that are locked inside a wallet. The stakers, just like mining of a PoW platform, get incentives for finding a new block of a cryptocurrency or adding a transaction on a blockchain. Besides the incentive aspect, PoS blockchain platforms are highly scalable in nature and also have high transaction speeds.
Top 4 Best Cryptocurrency Staking
A wide array of cryptocurrencies can be staked by the investors and users for earning passive income with their held or idle cryptocurrency assets. Here are some of the leading most cryptos that offer excellent staking rewards:
It is one of the hottest staking options available. If you have already bought Ethereum (ETH), you can easily stake it, become of the early validators, help the system grow further, and in return earn passive income.
For staking ETH, the minimum criteria is to own at least 32 ETH coins. In addition, you have to be the Eth1 mainnet client. You can get started by visiting Eth2 Launch Pad.
In June 2018, Tezos was born. It caused a major uproar as it became the biggest ICO (Initial Coin Offering) with a total investment of more than US$230 million. It implemented liquid proof-of-stake (LPoS), a PoS version.
XTZ is the native currency of Tezos and the staking process is called “baking”. The participants in the Tezos’ staking process are rewarded with the native coin. The system penalizes malicious bakers by confiscating their stake.
A user has to hold 8,000 XTZ coins and at the same time run a full node for becoming a staker/baker on Tezos. Many 3rd party services have also emerged that allow smaller coin holders to delegate their held XTZ and consequently share their rewards. XTZ’s annual percentage yield varies from 5-to-6%.
The main aim of Algorand (ALGO) is to carry out low-cost cross-border payments. For both security and transaction processing, the network needs stakers. It is especially true because of the PoS protocol. A pure proof-of-stake (PPoS) consensus mechanism is used but still needs stakers in running full nodes.
The ALGO delegation is also supported by the 3rd parties. The staking rewards for Algorand ranges within 5-to-10% annually. The reward percentage is mainly dependent upon the platform used. Binance Staking, for example, provides an 8% APY (annual percentage yield).
Icon (ICX), a complex Korean blockchain project, also offers a platform for staking natively. Delegated-Proof-of Stake (DPoS) consensus algorithm is used. This model involves finding of new blocks by a select number of users and verification of transactions. Others involved in the process simply delegate their ICX native tokens. The best part is the staking reward, which ranges from 6-to-36%.
Where to Stake Cryptocurrencies?
Crypto staking can be done on:
- Cryptocurrency Exchanges
- Wallets, especially hardware wallets
- Staking-as-a-Service Platforms
- Defi Staking
Top 2 Best Cryptocurrency Exchanges for Staking
- Binance: Ethereum 2.0 staking and many other DeFi staking including Binance Coin (BNB), DAI, BTC, Tether (USDT), and Binance USD (BUSD).
- Coinbase: ETH 2.0, ALGO, and XTZ.
Top 4 Best Wallet Staking
- Ledger Wallet: Tron (TRX), ATOM, and ALGO staking.
- Trust Wallet: XTZ, ATOM, VeChain (VET), TRX, IoTeX (IOTX), ALGO, TomoChain (TOMO), and Callisto (CLO) staking.
- CoolWallet S: Stablecoin (USDT) staking.
- Trezor: Tezos staking.
Top 2 Best Staking-as-a-Service Platforms Staking
- Stake Capital: Loom Network (LOOM), KAVA, XTZ, Aion (AION), Livepeer (LPT), and Cosmos (ATOM) staking.
- MyCointainer: Power Max, Power Plus, and Basic options available. Over 50 cryptocurrencies with on-chain staking support are available.
Top 4 Best DeFi Staking
- Maker (MKR)
- Synthetix (SNX)
- Yearn Finance (YFI)
- Compound (COMP)
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