We’ll go over:
- What is crypto staking and proof of stake?
- The benefits and risk to staking crypto
- Different ways to stake your coins
- The best crypto coins for staking and how much interest you will earn
If anything in this staking crypto guide isn’t clear, comment down at the bottom and let us know.
What Is Crypto Staking?
Staking crypto is a way to commit and invest your cryptocurrency coins for fixed periods of time. You can put your crypto holdings to work and earn interest in exchange for staking.
It is also a way to support a blockchain network by committing your crypto assets for a specific period of time. Staking enables crypto-related projects to verify their transactions and also rewards token holders for their efforts and loyalty.
Staking is available with cryptos that use the proof-of-stake (POS) model to facilitate payments. If you’re a crypto enthusiast, crypto staking is a great way to earn passive income from your crypto holdings.
Proof of stake (POS) is a mechanism used to confirm cryptocurrency transactions. Cryptocurrencies that use the POS model enables users to stake their coins and earn rewards by using their coins to erify transactions on the blockchain. POS is a more energy-efficient alternative to the proof-of-work model, which requires heavy equipment for mining.
The proof of stake model chooses validators to confirm blocks of transactions. The more tokens you stake, the more likely you are going to be chosen. Each time a new block is added to the blockchain, new coins are minted and distributed as rewards to stakers.
Before you participate in the process of staking crypto, you must first own a crypto that uses the POS model. Staking is done through many popular crypto exchanges and wallets.
The Best Crypto Coins to Stake
Our picks for the top staking crypto coins with the best returns are:
- AXS – Axie Infinity
- DFI – DefiChain
- CAKE – PancakeSwap
- HEX – HEX
- EOS – EOS
- SUSHI – Sushi
- BNB – Binance Smart Coin
- ILV – Illuvium
- DOT – Polkadot
- eGLD – Elrond
- CELO – Celo
- MATIC – Polygon
To determine the best coins for staking crypto, we looked at a few important factors:
- Which coins had a good interest rate
- Coins that had a good sized market cap
- Projects with real world value
- Coins that have future potential for growth
Next, we will go over our top coins for staking crypto in more detail.
#1. Axie Infinity (AXS)
Axie Infinity Shards (AXS) are an ERC-20 governance token used to support the Axie Infinity network. It is the native currency of Axie Infinity, a play-to-earn NFT game developed by Sky Mavis.
AXS has different use cases, Including for the payment of goods and services on the Axie Infinity network. The token also serves as in-game assets, which players can earn and convert to real-world money on NFT marketplaces.
AXS holders can stake their tokens to earn or claim newly created AXS. As of the time of writing this post, the interest rate for staking your token is pegged at 114% per year!
The process for staking crypto such as AXS is easy and straightforward. All you need is to have a Ronin Wallet enabled.
DFI is the coin used by DeFiChain. DeFiChain is a blockchain-powered platform created to maximize the full potential of decentralized finance within the Bitcoin ecosystem. It was launched on 2019 to provide the same financial services that commercial banks typically provide:
- Keeping funds
DFI helps to facilitate transparent and fast transactions on the DeFiChain network. Other use cases of this token include:
- Offering high throughput for all transactions.
- Supporting a wide range of crypto-economic transactions.
- Providing a reliable and decentralized governance system.
- Offering developers the ability to create DeFi apps on one chain.
The interest rate for staking DFI currently stands at 60%. With this high interest rate and depending on the amount of tokens you stake, you can do the math to know what you will earn after 30-90 days.
CAKE is a familiar token in the crypto scene. It is a BEP20 token and the native currency of the PancakeSwap network. The major function of CAKE is to incentivize the liquidity provision to the PancakeSwap platform.
CAKE can be used to pay for goods and services on the PancakeSwap network. Users can also earn a discount for using CAKE to pay for transaction fees.
You can also use CAKE to enter a lottery on PancakeSwap. Plus, CAKE is “stakeable” at an interest rate of 57%. Staking on PancakeSwap is done by committing your CAKE tokens to a liquidity pool to earn a reward.
HEX is a cryptocurrency and an ERC-20 token designed to revolutionize traditional payment systems. HEX is a store of value and it seeks to replace the Certificate of Deposit (CD). CDs are usually offered by commercial banks because they offer a slightly higher interest rate than the standard interest rate obtainable with a savings account.
HEX claims to be the first blockchain certificate of deposit, which rewards investors who lock up or stake their holdings for a period of time.
Users can stake HEX to earn mouth-watering returns on investment. At present, the interest rate for staking HEX stands at 37%. Before you make any attempt to stake this token, ensure you have a MetaMask wallet handy.
EOS is the native token of EOSIO network. EOSIO is a decentralized operating system that offers blockchain developers the required tools and services to create decentralized applications.
The EOS token has a wide range of use cases, including:
- supporting secure access and authentication
- data hosting
- usage management
- communication between internet and DApps.
EOS also aims to improve and enhance the experience of users and businesses. You can stake this token at a high interest rate of 33% to earn a profit from your investment.
SUSHI is an Ethereum-based token that powers up the SuShi exchange and automated market maker.
Users can also earn more tokens by harvesting SUSHI through the use of SushiBar, an application that allows them to stake SUSHI to reward a profit. You can stake SUSHI on different exchanges, including Binance, OKEx, and Huobi Global.
SUSHI holders have the right to vote and be voted for in the leadership process of the project. They can also stake their tokens to get a portion of the project’s transaction fees. At present, the interest rate for staking SUSHI stands at 22.95%.
BNB is another popular token that can fetch you high returns on your investments. BNB is a token of the Binance network.
Binance is one of the largest crypto exchanges in the world. BNB is used to support the growth of the Binance network. It also serves as a utility token that allows users to receive a discount when paying for transaction fees.
Users can also use BNB to pay for travel expenses such as flight booking and hotels. Big eCommerce stores are now accepting BNB as a payment method.
Aside from all of these use cases, you can also stake BNB to earn massive rewards. The interest rate currently stands at 19.5%.
ILV is a native token of Illuvium, which is an open-world fantasy battle game built on the Ethereum blockchain. Illuvium is an entertainment source for both hardcore DeFi fans and casual gamers. In the game, players spend their time building powerful beasts.
The ILV token has a wide range of use cases. It serves as the main token of the game and is also used for participating in the governance of the game. You can stake ILV to earn rewards for a period of one year. The current interest rate stands at 18.25%.
DOT is the native token of the Polkadot network. Founded in 2016, Polkadot is a blockchain interoperability protocol that connects different chains together in a single network. DOT serves three different purposes in the Polkadot network.
First, token holders have total control over the entire Polkadot network. Second, token holders have the right to vote for changed transaction fees, new upgrades, and overall governance. Third, token holders can stake their tokens to earn passive income.
Currently, the interest rate for staking DOT stands at 14%.
Elrond is a blockchain-powered platform that offers fast transaction speed when making payments. eGLD is the native token of the Elrond protocol. Introduced in August 2019, users can use eGLD to pay for network fees and reward validators.
Additionally, users can stake or lock eGLD in a liquidity pool to earn passive income. To stake eGLD, you need to first purchase the token on crypto exchanges like Binance, BitMax, Bitfinex, and OKEx.
The interest rate is currently pegged at 13.7%.
CELO is the governance token of the Celo platform. The token is designed for users to be able to send, receive, and store stablecoins running on the Celo network without a crypto wallet. The token also aims to make financial tools easy to use, borderless, and accessible for anyone with a smartphone.
CELO also supports staking crypto on popular exchanges at an interest rate of 13.23%. CELO holders can stake their tokens with secure custodial storage.
MATIC is an ERC-20 token of the Polygon Network. MATIC has different use cases, including as a settlement currency between users and for the payment of goods and services on the Polygon network. All transaction fees received by the team behind Polygon are paid in MATIC tokens.
Users can also stake MATIC to earn more tokens after a specific period of time. The current interest rate for staking MATIC is 12%. You can stake this token on popular exchanges like Binance, Coinbase, and BitMax.
There’s a wide range of benefits for committing your tokens towards the support of a network. Some of these benefits include:
- Crypto staking is an easy way to earn a high interest on your crypto assets.
- It is environmentally friendly than crypto mining
- Staking doesn’t require heavy mining equipment.
- Crypto staking gives you the opportunity to help maintain the efficiency and security of the blockchain.
The major benefit of staking crypto is that you will earn more cryptos, and usually, the interest rate is very high. Staking is potentially a great way to earn passive income.
Risks of Staking Crypto
There are a few drawbacks to staking crypto that you should know before you commit your coins long term:
- While your coins are staked, you will be unable to make any other trades with the coins.
- The volatility of the crypto market means that your coins are susceptible to large losses or gains.
Make sure that your staking crypto coins are not required for any other reason before you start staking. Some coins let you pull out early, but you will not gain and interest and there may be penalties for doing so.
How are Crypto Staking Rates Determined?
When you start to research which coins to invest, you’ll notice a wide range of interest rates available. How are these crypto staking rates calculated?
Well, the staking rate is a product of a few different variables:
- coin’s inflation
- value of the coin
- number of coins currently being staked
The formula for staking rate is:
APR interest rate – [Inflation * (1-Community Tax)] / Bonded Tokens Ratio – https://medium.com/cosmostation/staking-apr-how-is-it-calculated-466f5091dfd2
How do you stake cryptocurrency?
There are three main ways to stake crypto and earn passive income. You can stake coins:
On an Exchange
All of the top crypto exchanges support staking for coins that you own. Our top spots to stake crypto are:
The process for staking crypto is the same general steps on all exchanges:
- Click on the exchange links above and register account if you don’t have one yet.
- Buy the coin you want to stake on the crypto platform.
- After you have coins in your account, click on the “Stake” or “Earn” button on the platform
- Follow the steps to stake your coin, noting the term limit and interest you will earn.
- Complete staking and set a reminder in your phone to re-stake on the date your current one ends.
Joining a pool dedicated to staking crypto
A staking pool allows multiple people to combine their money in order to increase the chance of being rewarded during the proof of stake process, which increases their staking interest rate.
A staking pool is usually managed by an overall operator. Stakeholders who join the pool must adhere to the staking length and minimum requirements. All rewards earned by the pool will be split proportionally by those who take part. Individual rewards are usually less in a pool because of this splitting, but rewards are more frequent and predictable.
Staking pools are tougher to find because they operate as individual websites from crypto exchanges. This list on DeFi Prime has a great list of staking service providers for all popular coins.
Becoming a validator
A crypto validator is someone that verifies the transactions on a specific blockchain. They are responsible for securing the network by storing the blockchain’s registry and receive coins in exchange for validating.
In order to become a validator, you need to install and run some specific node software for the blockchain on your computer. After you are setup, you will receive regular rewards for taking part in validation efforts. The process is largely automatic once you get things setup for the first time.
Most crypto users see this as an expert activity.
As you can see, staking some of your cryptocurrency coins can be quite lucrative. Its a great way to make passive income and diversify your portfolio.
What is your favorite coin for staking crypto in order to earn interest income? Comment down below and let us know today.