Remember the good old days when you could earn cryptocurrencies by mining? Alas, those days are behind us for the most part, but there is now another way you can earn crypto rewards by helping to validate transactions. It is called staking.
You probably have a lot of questions about cryptocurrency staking. In this guide, we are going to explain exactly what staking is and how it works. We will go over the benefits and drawbacks of staking, and introduce you to some of the top staking programs that are out there.
Let’s get started by exploring the basic definition of cryptocurrency staking. If you need a quick reference to any terms we discuss along the way, you can scroll down to the bottom of this article for a glossary.
What is Crypto Staking?
To understand crypto staking, let’s start with a simple definition from Coinbase:
“Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.”
The succinct nature of this definition brings the overall idea across with ease. But there may be some concepts here you are not yet familiar with, such as “proof-of-stake.” So, let’s dig in a little deeper.
In a sense, staking cryptocurrencies is like mining, but with a higher degree of efficiency. Let’s consider mining for a moment, a process with which you probably are a bit more familiar.
Mining involves a process called “Proof of Work” (PoW). Miners who are participating in the system are presented with a mathematical puzzle. The puzzle is completely arbitrary in nature. The miners all need to try and solve it. The first miner to succeed adds the next blockchain block.
While Proof of Work does help secure a decentralized network, there is no denying that arbitrary puzzle solving is not a particularly resource-efficient way to operate.
So, now we can loop back around to talking about staking. Instead of relying on Proof of Work, staking relies on Proof of Stake (PoS).
With Proof of Stake, there are no puzzles to solve. Indeed, the process is passive for participants.
By “staking” your crypto coins, you lock them in the network. As Coinbase explains, this is “similar to a security deposit.”
In doing so, you give yourself a chance of being able to add the next block to the blockchain.
But there will not be a hash challenge at this point. Instead, the protocol chooses a participant who has staked their coins.
Selection is random, but the probability of selection is weighted with respect to stake size.
So, the more coins you stake, the better the chances are that you will be selected. If you are, you earn a reward.
The higher efficiency of this system is clear. Additionally, it makes blockchains more scalable, which is another advantage. Transaction speeds are improved as well through PoS.
How Much Can You Earn By Staking Cryptocurrencies?
Now that you understand the basics of staking coins, you probably are wondering how much you can earn by participating as a validator.
There is no way to give an exact answer to this question. Here are some of the factors that can impact your potential earnings:
- Which blockchain network you are participating in.
- The size of your stake.
- How long you have been participating.
- The rate of inflation.
- The total coins currently staked by all participants.
You might be able to figure out in advance just how much you can earn by staking a particular amount.
That would be the case if you are on a network that uses a fixed percentage to calculate rewards, and which gives them out across the board to all participants based on their stakes sizes.
But there are also networks where the rewards are calculated differently from block to block, and where you only receive one if you are selected at random to validate.
What Types of Cryptocurrencies Can You Stake?
Any crypto network that uses staking for security and consensus provides you an opportunity to get involved with staking. Here are some of the cryptocurrencies you can stake:
- AKT Token:
- Decentral Games:
- Ethereum 2.0:
- Flow Token:
- NAV Coin:
Akash Network describes itself as, “censorship-resistant, permissionless, and self-sovereign,” and calls itself “the world’s first open source cloud.” Its native utility tokens are called Akash Tokens, or AKT. This token is popular for staking because it pays especially lucrative rewards.
This is Binance’s cryptocurrency. Options for staking BNB include the BNB Vault, BNB token, and Trust wallet.
One of the most well-known cryptocurrencies out there right now is DASH, or “digital cash.” Indeed, it was also groundbreaking with respect to staking. The way this works with DASH is a bit different than other cryptocurrencies on this list. But if you run a masternode, you can earn dividends. The downside is that the program requires 1,000 DASH minimum to participate.
decentral.games is a “metaverse” where you can play casino games and receive Decentral Games ERC20 governance tokens in return. Abbreviated $DG, Decentral Games tokens are another option for staking at this time. If you like Decentral Games, you can refer new players as well to earn more tokens to stake.
Naturally, you can also stake ETH2. As a lot of people already hold ETH2, this is an easy one to get into staking.
This is a type of cryptocurrency that was designed for gaming. You can stake it using multiple methods.
Don’t meet the minimum required amounts to stake other cryptocurrencies? Consider staking Neblio (NEBL), which doesn’t impose those types of requirements.
If you have a NEO wallet, you can stake this Chinese crypto token.
If you are on the ChangeNOW exchange, you may be familiar with its native cryptocurrency, NOW tokens. You can stake NOW tokens for progressive rewards. The longer you lock your tokens through the program, the higher your earnings percentages will be. You only need 10 NOW to get started.
Short for “Private Instant Verified Transaction,” PIVX lets you earn either by running a masternode or by staking. As such, it offers flexible options no matter how much or how little PIVX you have.
Built on the core code of Bitcoin, NAV Coin has been around since 2014. If you want to be able to stake large amounts, you’ll love how there are no caps for participation.
Drawing together elements of Bitcoin and Ethereum, the QTUM foundation came up with the QTUM crypto. There are no minimums to participate in staking.
This Solana platform automated market maker is abbreviated as RAY. A Solana wallet is necessary if you want to stake RAY.
You won’t earn a huge amount staking this crypto unless you have a lot of it to stake, but it may be worth thinking about.
Abbreviated XTZ, Tezos is a great starting point for staking because no matter which major exchanges you belong to, you should be able to participate. This is not the case for every cryptocurrency you can stake. So, you might consider making this your first since it is so easy to dive in. In fact, we recommend Binance for staking XTZ.
If you search around, you can find other options for staking crypto.
What are the Benefits of Staking Your Cryptocurrencies?
Here are a few reasons to consider staking cryptocurrencies:
- It is more accessible than mining.
It used to be that you could mine with a regular home computer. But those days are gone. Now, if you want to mine, you have to get a mining rig, which is not cheap. On top of that, mining itself is more challenging than it used to be. So, the entry barriers have gone way up. For that reason, staking has become a popular alternative. You do not need to invest in fancy hardware to do it, and you can get started with a few simple steps. In fact, it has pretty much become the equivalent opportunity to what mining used to be in the early days of crypto.
- Staking is simple.
While it might sound confusing the first time you are reading about it, you will quickly discover how straightforward it is.
- You can earn passive income by staking.
You are holding crypto anyway, so why not put it to work for you? Staking gives you a chance to passively earn income while you focus your energy on other things.
- Entry barriers are generally low.
There are some cryptos that you need to be holding a lot of in order to participate in staking, but for many, the minimum requirements are low or nonexistent. As a result, even if you do not have a lot of crypto, you can stake and earn.
- You’ll probably earn more this way than you do in interest on your regular bank accounts.
Seriously, how much interest are you earning in your savings account these days? It’s probably pennies. The percentages you can earn staking your crypto coins are far higher. So, this can be a more lucrative way to earn.
- You will be supporting the decentralized economy.
When you stake coins or tokens, you are helping to validate transactions and reach consensus. So, you are directly playing a part in maintaining crypto networks.
Are There Any Drawbacks to Staking Your Cryptocurrencies?
You cannot access the coins you are staking when they are locked. This probably will not be much of an inconvenience for you if you choose programs that only lock your coins for a brief period (i.e. a day). But if you pick a platform that locks coins for longer, you might be inconvenienced by not being able to access those funds.
The usual caveats about the volatile nature of crypto still apply. When you stake crypto, you are invested in it, just as you would be if you were not staking. That means that the volatile fluctuations in the value of that cryptocurrency will affect you. Sometimes, that could mean a steep rise in value. Other times, it could mean a drop off a cliff.
How to Get Started With Crypto Staking
Now that we have talked a bit about the pros and cons of staking cryptocurrencies, let’s talk about how you can get started with staking coins.
- Decide what you want to stake.
- Get a wallet.
- Obtain coins to stake.
- Get your connection set up.
- Stake your coins.
We discussed some of the coins and tokens you can stake already. There are a lot of factors to consider when choosing what to stake—everything from the ease of getting started to what you expect from that coin in the future.
If you do not already have a suitable wallet for the crypto you have chosen, you will need to get one.
You may or may not already have the coins you need to start staking. Remember, you might need to meet a particular minimum requirement, depending on which coin you have decided to stake.
In order to stake, you have to be connected to the internet constantly. Moreover, the connection needs to be stable.
Choose how many coins you want to stake, and stake them. From here on out, the entire process is a passive one. Just wait to earn rewards.
Best Places to Stake Your Cryptocurrencies
Now that you know the basics of how to stake crypto, let’s check out some places where you can stake coins and tokens.
Going by volume, Binance is the largest crypto-only exchange on the planet. You can trade hundreds of alt coins here, making it the go-to choice pretty much regardless of what you want to exchange.
Explaining its role in staking, Binance writes, “Binance strives to offer its users only the best DeFi Mining projects. However, Binance only acts as a platform to showcase projects and provide users with related services, such as accessing funds on behalf of the user and distributing earnings, etc.”
Elaborating on the convenience of its services, Binance says, “Binance’s one-stop service allows users to obtain generous online rewards without having to keep an on-chain wallet.”
The company says that using their site for staking is a bit like participating in a staking pool, but sans fees. They take care of the technical details.
At the time of this writing, we see opportunities to stake:
You can participate in either locked staking or DeFi staking (see glossary below). If you click on the tab for “locked staking,” you will see durations in terms of days listed for each of the cryptos: 15, 30, 60, and 90 are the options you can choose from.
If you click on “DeFi staking,” you can participate in flexible lock staking instead.
One great thing about using Binance for locked staking is that the lock-up period for your funds is only a day. At 00:00 (UTC) the next day, your earnings are computed. That info comes from the staking page. Elsewhere on their site, Binance says that they distribute earnings at the beginning of every month.
Another exchange where you can try staking crypto is Kraken, which is based in Los Angeles and licensed and regulated in the USA. It was the first cryptocurrency exchange to receive a bank charter.
In terms of ease-of-use, Kraken got off to a rough start in 2017, but since then, it has become an intuitive and user-friendly exchange platform.
At the time of this writing, these are the coins we see available for staking at Kraken:
- ETH 2
You will notice that Kraken offers both “on-chain” and “off-chain” staking. The site explains, “On-Chain staking allows you to stake your assets with blockchain Proof of Stake protocols such as Tezos, while Off-Chain staking allows you to stake your assets with Kraken internal programs. Off-chain staking is available for eligible countries only.”
What you can earn varies from one coin to another, of course, but at the moment, the highest rate of return Kraken is listing is 20% for KAVA.
This exchange, based in London, has been around since 2013, and was actually the first cloud mining provider in existence. Today, its services span far beyond mining, and it is a fully functional exchange offering buying, selling, and trading of cryptocurrencies. It also offers staking.
At the time of this writing, CEX.IO lists $42,200,000 in total staking assets, and $465,000 in total rewards paid out to over 25,000 clients. Here are the coins we see available to stake:
So, that is a nice, big selection. Regarding rewards, CEX.IO writes, “Rewards are calculated every hour and are sent to your account once a month. In the future, we’ll work on increasing the frequency of payouts. If you hold coins less than a month, your reward will still be calculated for the period you held the coins in question.”
If you are in the USA, if there is one name you know in the world of crypto exchanges, it is no doubt Coinbase. Indeed, they are arguably our top recommendation for people just getting into crypto since the site is so easy to use.
Even if you have no more than $1 in crypto assets, you can start staking right away on Coinbase. As the site points out, it only takes a couple of seconds to begin, because Coinbase has made it so fast and easy.
We did not see a full list of coins to stake, but we did see the following:
- USD Coin
That is just a sampling of what is available, and Coinbase regularly adds to its list of cryptos you can stake. Currently, Coinbase advertises that you can earn up to 6% APR.
Crypto Staking Glossary
Above, we talked about cryptocurrency staking: what it is, how it works, pros and cons, and where you can participate. Below is a brief glossary with some key terms.
- Cold staking:
- Delegated Proof of Stake (DPoS):
- Ethereum 2.0:
- Proof of Stake (PoS):
- Proof of Work (PoW):
- Staking pool:
It is possible to stake cryptocurrencies while keeping your funds in cold storage. You can do this if you want to make sure that your funds stay as secure as possible.
DeFi is an abbreviation for “decentralized finance.” Sometimes, it is also called “open finance.” Decentralized finance using blockchain networks makes it possible to remove middlemen from a wide range of financial transactions—everything from a simple transfer or funds to crowdfunding, lending, derivatives, and more.
This alternative to regular PoS is yet another means of securing a network and achieving consensus. It involves voting for delegates for blockchain management. The more coins are held, the more votes you have. Delegates earn rewards, returning a portion of their earnings to the users who elected them. The more you contributed, the more you can receive from the delegates you voted for.
Originally, Ethereum used Proof of Work rather than Proof of Stake. Ethereum 2.0 is the migration of ETH to a Proof of Stake system of validation.
Proof of Stake is a method of securing and validating through random selection with probabilities of selection being based on stake sizes. It is more efficient than Proof of Work.
This is a method of securing a crypto network and adding blocks after solving mathematical puzzles. Proof of Work is associated with old-fashioned mining.
Staking is a process wherein participants can lock their cryptocurrencies to help validate transactions through Proof of Stake for blockchains. It is similar to mining, but easier to participate in than mining currently is. It also is highly efficient. Participants may earn rewards based on the amounts they stake.
Since stake sizes play a role in determining potential rewards, participants sometimes join together in “staking pools.” That way, they can pool their individual stakes. When they earn, they split the rewards according to how much each participant staked percentage-wise. Staking pools can also help participants get around minimum balance requirements that might otherwise stand in the way as entry barriers.
Stake Coins Now and Start Earning Rewards
Now you know all about how staking works for cryptocurrencies. Ready to start earning rewards? Click on any of the links in this article to sign up at one of our recommended sites. Enjoy reaping the rewards of crypto staking!
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