Cryptocurrency investments have been making people millionaires and billionaires all over the world. Little wonder crypto use is gaining ground everywhere despite strict and even stifling regulations.
If you are into staking and looking to join the crypto bandwagon or diversify your crypto investments portfolio, then crypto staking could be for you.
This guide details how crypto staking can be a passive income earner, the best crypto staking platform, and more.
What Is Crypto Staking?
In simple terms, crypto staking is a practice in which crypto holders participate and reap rewards in a consensus mechanism known as Proof of Stake (PoS).
Proof of Stake was first used on a blockchain known as Peercoin in 2012. Though terms may vary among exchanges, individuals or entities that participate in a PoS consensus mechanism broadly fall into two categories:
- Validators: node operators in charge of verifying transactions and creating new blocks.
- Delegators: users who stake their cryptos by locking them up for a period and delegating them to validators to secure and record new blockchain transactions.
The minimum staking requirement for being a validator or delegator in most blockchains varies but is usually high.
For example, to qualify as an Ethereum validator, you must stake not less than 32 Ether (ETH). Similarly, intending delegators in a Polkadot staking pool must stake a minimum of 502 DOT.
PoS participants earn rewards, including passive income. However, staking rewards differ according to the stake’s role, the particular platform, and/or the method used.
Validators who often participate actively earn more rewards – newly created cryptos and transaction fees. Delegators are usually passive participants who earn less – a fraction of validators’ transaction fees.
The staking platform usually determines the waiting period before the reward is awarded. Each crypto has its own specific reward structure. The key metric to note in the rewards is the annual percentage yield (APY).
With the rise in cryptocurrency adoption, the number of PoS cryptos is also increasing. Popular crypto staking assets include Ethereum, Binance Coin, Cardano, Solana, Avalanche, Matic, and Polkadot.
According to Coinmarketcap, here are the top 10 PoS tokens by market capitalization (as of August 28, 2024).
- Ethereum (ETH).
- Solana (SOL).
- Toncoin (TON).
- Cardano (ADA).
- Polygon (MATIC).
- Injective (INJ).
- Algorand (ALGO).
- MultiversX (EGLD).
- Tezos (XTZ).
- Mina (MINA).
If you are wondering why Bitcoin is not on the list, the answer is that Bitcoin uses a consensus mechanism different from PoS.
Steps Involved In Crypto Staking
Crypto staking can be conducted in various ways. Examples include exchange staking, running your own validator, or staking to a standalone validator. The steps below assume that you are using a staking platform.
- Choose a crypto: You must select a crypto because not all cryptos use the PoS mechanism, as noted above with Bitcoin. Moreover, each PoS coin usually has its peculiar reward and other characteristics.
- Choose a wallet: You must choose a wallet that supports staking and ensure that it supports staking with your chosen crypto.
- Purchase your chosen crypto: After identifying the crypto you’d like to stake with and selecting a wallet, it’s time to purchase some of it. Lots of crypto exchanges can help you achieve this.
- Transfer your crypto to your wallet: Though crypto exchanges can hold your cryptos, storing them in a private wallet is better for extra security.
- Join a staking platform: You’ll have to observe the usual internet protocol of signing up for an account with a staking platform. Research fees, yields and more before settling for a platform.
- Stake and earn rewards: That’s it! You can now stake your cryptos and start earning based on the terms and conditions of your platform.
Top 5 Platforms For Staking Crypto And Passive Earning
Thinking of the best place to stake crypto assets? Well, the good news is that there are lots of options available. Below are the best crypto staking platforms in 2024. As usual, they were determined by extensive research.
Binance Earn
Binance’s multiple earning opportunities and APY are some variables that rank it among the best crypto staking platforms in 2024. As many as 17 digital assets are supported by Binance Earn.
This means a chance for portfolio diversification while also offering protection to your principal investment.
Options such as ETH Staking, Simple Earn and BNB Vault offer you passive income-earning possibilities. Features in ETH Staking include staking with as little as 0.0001 ETH, daily rewards, trading and DeFi yields.
Simple Earn is a flexible option that allows you to redeem at any time as well as to gain higher returns by locking your assets.
BNB Vault not only offers some flexibility but also provides a multiplicity of rewards to boost your chances of earning more. Additionally, service offerings such as “Principal Protected” and “Dual Investment” allow for the maximization of returns and management of risk.
Here are the crypto assets with the highest APY in Binance Earn (as of August 27, 2024):
- ETH: Up to 127.53%.
- DOT: Up to 84.67%.
- SOL: Up to 84.46%.
- EOS: Up to 25%.
- OM: Up to 19.9%.
Binance Earn offers varying lock-up periods which allow you to settle for a term that is most suitable for your investment plan. Earnings are determined by the coin staked while payouts are made at the end of the staking term.
In summary, Binance is a platform with a simplified staking process that makes it easy to earn rewards without much stress.
Despite the regulatory challenges it faces, the company continues to deliver quality services across several jurisdictions.
Pros
- Up to 127.53% APY.
- Offers 17 assets.
- Multiple yields and terms.
- Additional offers such as interest accounts and yield farming.
- Crypto giveaways are among the best.
- Multi-jurisdiction regulatory compliance.
Cons
- Some features may be unavailable in some jurisdictions.
- Complex interface.
Coinbase
With attributes such as 136 staking assets and huge popularity, Coinbase remains one of the best crypto staking platforms for passive income seekers. Some of the crypto assets on offer include Ethereum, Cardano, Polygon, Solana and Polkadot.
Newbies will particularly settle well in Coinbase, thanks to its user-friendly nature.
The following are some Coinbase assets with the best APY:
- Cosmos: Up to 12.84%.
- Bittensor: Up to 18.78%.
- Injective: Up to 19.76%.
Notably, Coinbase rewards are only awarded on cryptos purchased at the Coinbase platform. This policy could be a concern when you consider the 1.49% trading commission it charges and the 3.99% rate for using a credit or debit card to purchase cryptos on the exchange.
Additionally, the yields from staking on most of Coinbase’s assets attract a 35% standard commission. The payout frequency at Coinbase depends on the type of coin staked.
Apart from staking, Coinbase users can also leverage DeFi yield rewards for Tether and Dai. However, yields on these vary according to market conditions. Real-time tracking of both the staking and DeFi yield schemes is available on Coinbase’s mobile app (for iOS and Android) or its website.
Although it is regulated by US licencing authorities, Coinbase staking is available for crypto enthusiasts in the US at the moment.
Pros
- Beginner-friendly option.
- 136 digital assets available.
- Additional reward options.
- Real-time tracking.
Cons
- 3.99% rate for credit and debit card crypto purchases.
- High trading commissions.
- Only flexible terms are available.
Kraken
Kraken is a popular platform where stakers can enjoy competitive yields of up to 26%. Diversify your portfolio at one of the best DeFI staking platforms around with 24 digital assets including Ethereum, Polygon, Cardano, Tether and Solana. Aside from BTC, all of Kraken’s staking cryptos are initiated on-chain.
Some of Kraken’s top APY cryptos are:
- Kusama: Up to 24%.
- Polkadot: Up to 21%.
- The Graph: Up to 13%.
Staking options here are offered flexibly. Some of those options offer bonded staking. No additional rewards are available. Payout frequency ranges between bi-weekly to yearly and is dependent on the asset involved. In terms of regulation, US authorities have licensed Kraken to operate as a money service organization.
Pros
- Competitive APYs.
- Up to 24 digital assets.
- Bi-weekly reward opportunities.
- Unstake without penalty.
Cons
- Variations in terms and conditions based on the asset.
- Less transparency on fees.
- No additional rewards.
- Offers only flexible terms.
Nexo
Trusted by more than seven million users, Nexo has been providing opportunities for reliable earnings and unfettered access to funds since 2018. An intuitive user interface and insurance cover for custodial assets help rank Nexo high in terms of user-friendliness and security for those seeking passive income.
Presently, it supports portfolio diversification with more than 40 digital assets which include BTC, USDC and USDT. Automatic earnings and daily payments are also available.
Its term options are both flexible and fixed, so you can opt for no lockups or fixed durations that attract higher earnings. Fixed terms may be between 1 to 12 months in length. You’ll enjoy significant bonuses if you lock your assets for at least 3 months in a year.
Their “Base” account allows for up to 4% earnings on Bitcoin and up to 12% on stablecoins such as USDT. Assets with the highest APY on Nexo include:
- AXS: Up to 20%.
- NEXO: Up to 12%.
- DOT: Up to 11%.
- USDT: Up to 12%.
- GBPX: Up to 11%.
Daily compounding at Nexo means enhanced earnings and an accelerated growth of your assets over time. Payouts are made daily. Nexo is another platform you can earn with ease – all you need to do to start earning automatic interest is purchase or transfer assets.
Like some other platforms, Nexo is facing regulatory challenges in some countries but is also licenced in several other jurisdictions where it continues to rank among the best staking platforms.
Pros
- Intuitive interface.
- Insurance cover for custodial assets.
- Support for more than 40 digital assets.
- Up to 12% APY on stablecoins and 20% APY on some other cryptos.
- Daily compounding.
- Automatic earnings.
Cons
- Getting the highest rates is mostly possible if you receive rewards in NEXO.
- Cryptos must be held for not less than 3 months before you can obtain higher rates.
OKX
OKX is a global crypto platform where you can trade on over 340 cryptocurrencies, many of which will make you eligible for interest payments.
Apart from being one of the best crypto staking platforms, it is also a leading platform for yield farming. Below are some OKX assets with the highest APY.
- FLR: 33.84%.
- KSM: 17.96%.
- INJ: 17.61%.
- ZIL: 17.49%.
- DOT: 16.83%.
- ATOM: 16.19%.
OKX’s staking platform integrates seamlessly into its exchange, ensuring simplicity and ease of use. The several cryptos available for passive earners can be staked based on flexible and fixed periods.
Higher opportunities are available for lock-up periods of 120, 90, 60, 30, and 15 days.
Apart from DeFi staking, OKX also operates crypto savings accounts that offer investors APY of up to 30% on their BTC, ETH and USDT assets. OKX savings account tokens have a lock-up period of three days.
They accept debit cards, credit cards, bank transfers, and e-wallets to buy cryptocurrency with a minimum trade size of $10.
Additionally, they charge a trading fee of just 0.10% (among the lowest in the crypto industry) for purchasing cryptos. Payouts are made on a daily basis.
OKX recently chose Malta as its Market in the Crypto-Assets hub. It’s been regulated in Malta since 2021.
Pros
- over 340 cryptocurrencies available.
- Includes both flexible and higher earning fixed staking options.
- Competitive APY.
- Daily interest payouts.
- Very low trading fee.
Cons
- Less transparency on credit card charges.
Conclusion
Crypto staking is gaining increased popularity, thanks to the activities of platforms such as Ethereum and others.
Similarly, more blockchains are adopting the Proof-of-Stake consensus mechanism. However, while staking cryptos can be potentially rewarding, it can also be inherently risky.
If you are new to blockchain or staking, make sure you research thoroughly by reading guides such as this and others. They will help you to learn about the best crypto staking platforms and more before venturing into staking.
Wise newbie investors usually start with smaller amounts and increase their stakes as their expertise and experience grow.
FAQs
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Can you make money from staking cryptos?
Yes. You can earn significant passive income by staking cryptos. Your earnings will depend on a number of variables including the amount you stake and how long you lock up your cryptos. Staking at the best crypto staking platforms can help offer you better terms to make even more money.
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What are active and passive crypto staking?
In active crypto staking, you lock your cryptos on a blockchain network with the aim of actively taking part in the network’s activities. Active participants are likely to be responsible for validating transactions and creating new crypto blocks to earn rewards.
In passive crypto staking, you lock your cryptos on a blockchain network with the aim of keeping it secure and facilitating efficient blockchain transactions. Staking passively consumes less time and usually yields fewer rewards than participating actively.
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What is Delegated Proof of Stake (DPoS)?
DPoS is a modified version of the PoS consensus mechanism. In a DPoS mechanism, the delegates that will validate the blocks are selected by participants. In a nutshell, it is an inclusive, democratic and scalable approach to validating transactions in a blockchain.
