Best Places to Stake Crypto 2023
With annual revenue of $15.3 billion, Bitcoin mining is still the most lucrative area in the crypto industry. However, technical requirements for miners have become more stringent in the meantime, leaving no space for individual fintech enthusiasts to gain a competitive edge.
As a result, next-gen crypto projects like Cardano (ADA) and Solana (SOL) have taken a different route — implementing the Proof of Stake (PoS) protocol.
Similar to Proof-of-Work (PoW) — the mechanism Bitcoin and other dominant altcoins use — this staking mechanism involves validating transactions on the blockchain, whereby participants receive newly-minted coins as a reward for their contribution. However, the PoS protocol doesn’t require expensive machinery.
Instead, you simply lock your existing coins in the network’s depository for a given time period and receive a certain portion of crypto in return.
Crypto exchanges have also adopted this business technique. In most cases, the crypto exchange gathers a group of users in a staking pool for better results on the blockchain or uses the staked coins for liquidity maintenance instead.
In both forms, staking has attracted massive attention in the crypto community. For that reason, we’ve gathered all the relevant information you need to know before you consider it as a potential source of passive income.
Best Crypto Staking Platforms
We recommend you start your staking journey under the umbrella of a well-established crypto exchange that would do the staking on your behalf for a determined interest rate. For starters, we’ve listed the best crypto staking platforms where you can leave your crypto assets with comfort and ease.
When Binance appeared on the scene in 2017, it redefined the meaning of the term world-renowned crypto platform. The exchange is an all-in-one package, organized in several platform layers depending on users’ needs and experiences.
The exchange offers a large selection of 500 coins and multiple trading activities: instant purchases, spot market, crypto derivatives, and a crypto debit card. That’s why it didn’t come as a surprise when Binance introduced the staking option and offered a few different staking plans:
As the name suggests, Binance allows users to earn rewards for locking their DeFi tokens on the platform for a predefined time period. The AIR (Annualized Interest Rate), the staking period, and other terms depend on the token itself. For example, you can stake the BUSD stable coin for 120 days and earn an interest rate of 13.33%.
Ethereum 2.0 Staking
The second-largest blockchain network is currently transitioning from a PoW to a PoS mechanism. While you’re eagerly waiting for the launch of the more environmentally-friendly version of Ethereum, Binance allows you to stake ETH on its native Binance Smart Chain (BSC). To meet the BSC standards, your staked ETH will be automatically converted into Beacon Ethereum (BETH), including your rewards. You can trade with BETH or swap it for ETH at any time.
This option allows you to “lock” various types of crypto assets like Tron (TRX) and Dai (DAI) on the exchange with an earning plan based on how long your assets remain on the exchange. For example, you can lock Tether (USDT) for 7 days and earn 4.5% or 5.1% for 90 days.
In addition, you can try the Binance Vault investment opportunity if you own a certain portion of the Binance native coin (BNB) or take part in multiple Initial Exchange Offerings (IEO) through Binance Launchpad.
- Robust security measures to provide risk-free crypto staking;
- Different staking plans, organized in separate sections;
- High returns on all staking plans.
- Slow customer support – users can wait more than 24 hours for the support team to address their queries;
- Limited choice of staking assets.
Crypto.com is another versatile trading platform suitable for those who dare to do more than just buy-and-sell transactions with their crypto assets. It supports over 250 digital assets, NFTs, and multiple investment options, including staking. It’s important to mention that Crypto.com operates as a mobile app or, more specifically, a set of mobile apps you can download both on iOS and Android devices.
The staking options on Crypto.com mainly depend on the app you’re using. The regular Crypto.com app offers you to stake their native CRO token only. CRO staking has a fixed lock-up period of 180 days and a 10% APR that is paid on a daily basis.
The important thing is that by staking CRO, you’re getting a few advantages, such as trade fee discounts, a referral program, and access to Syndicate, a fundraising platform for accommodating their upcoming crypto projects to the Crypto.com list of supported crypto assets.
Moreover, there is a separate Earn program under the umbrella of Crypto.com, which offers passive-earning options with various cryptocurrencies. Here, interest rates depend on the type of crypto you’re staking and the time period. The exchange claims that you can get to 14.5% interest rate on selected cryptos.
Finally, you can also find a couple of staking and earning offerings with the possibility of no lock-up periods and over 35 DeFi tokens on the Crypto.com DeFi Wallet.
- Very competitive fees and discount options;
- A large number of staking crypto coins;
- Chances for 14.5% APY on selected crypto.
- The discount system can be confusing for beginners;
- Must use their native CRO coin to qualify for discounts;
- High minimum deposit or withdrawal.
Coinbase is one of the earliest US crypto exchanges, well-known for the amicable trading environment it provides to newcomers from all over the world. The exchange operates as a brokerage service that delivers instant fiat-to-crypto purchases through your bank account (ACH) or debit cards.
Apart from the exceptionally intuitive platform, Coinbase is valued for the strict regulatory norms it follows as a regulated company by the New York State Department of Financial Service.
Coinbase has never been oriented to expanding the scope of trading services or the list of supported digital assets. However, it has a very-well designed staking program in cooperation with the most attractive PoS networks: Cosmos (ATOM), Cardano (ADA), Ethereum (ETH), Tezos (XTZ), and Algorand (ALGO).
Staking is individually determined based on the type of coin you’re holding and the frequency of block production by the respective blockchain. For example, for ATOM staking, you’ll need a minimum balance of 0.0001 ATOM with a payot rate of 7 days.
Your staking options on Coinbase can also depend on your geographical location. For example, Canadians can’t stake ETH, while the New York state residents are limited only to ADA, ALGO. Australian stakers, on the other hand, can choose between ATOM and XTZ only.
- Exceptional ease of use for staking;
- Regulated by NYSDFC, with FDIC insured funds.
- Restricts you to 40 ETH for staking;
- Huge staking fees — 25% of your reward.
Kraken has built its high reputation based on the robust level of security it offers to crypto traders across 100 countries worldwide. It’s a veteran US-based exchange that has grown into a mainstream arena for trading crypto. The exchange leans towards more advanced traders and institutions clients, but it features quite a neat platform to welcome users from all walks of life.
Kraken offers a sophisticated spot market with around 60 digital assets and a few fiat currencies (USD, CAD, AUD, GBP, EUR, JPY, and CHF), margin trading, an OTC desk, and crypto derivatives for more advanced audiences.
The platform has recently introduced staking as an option for users who hold their assets in the Kraken wallets. The exchange offers both the regular on-chain staking of PoS cryptos and off-chain staking that enables you to stake your holdings with Kraken internal programs. The latter isn’t available in all supported countries.
Altogether, Kraken offers 15 staking programs: 12 PoS coins, including ADA, ETH2, Flow (FLOW), Kusama (KSM), Mina (MINA), and Polkadot (DOT), and 3 off-chain staking plans with BTC, USD, and EUR.
Kraken calculates rewards yearly, and as we could see from the previous exchanges, rewards depend on the coin type. For example, you can earn 4%-6% for ADA but 10%-12% for staking MINA. Understandably, off-chain staking coins come with much lower annual rewards: USD (2%), BTC (0.25%), and EUR (1.5%).
- Options for staking assets outside the PoS consensus;
- A highly regulated and safe place for staking;
- Exposure to a value increase of your cryptocurrencies even during their lock-up period.
- Oriented towards advanced and corporate audiences;
- Strict KYC regulations.
What Is Staking?
From an end-user point of view, we see staking as a type of passive income given to users for participating in the process of transaction validation on PoS blockchains. Now, let’s move a step forward and learn a couple of “staking ropes” about the origin of the interest rate we receive, like a dividend on a saving account.
How Does Proof of Stake Work?
In a nutshell, Proof of Stake is a consensus mechanism that some blockchains use to synchronize and record upcoming data in a trustless manner. The consensus algorithms decide which participating computer (node) in the network will add a new block of transactions to the blockchain.
PoS is the second consensus applied on the blockchain. People who have been involved in the crypto industry are more familiar with the original Proof of– Work consensus, where miners compete against each other to be the first in solving complex equations.
This process of blockchain verification is called mining, as it requires computing power and hardware equipment to complete the equations (with reference to the real-live mining of metals).
In comparison, PoS is a more energy-efficient way of validating transactions because participants, called validators instead of miners, stake a certain amount of cryptocurrencies they own to establish secure grounds for validating transactions.
The transparency is guaranteed by the validator, who must first buy the crypto and then, stake it for a certain period in order to be selected for validating the transaction, thus earning a reward in return.
Is Staking Safe?
Crypto staking isn’t risk-free, even though potential crypto investors fail to consider risk factors in-depth because of the generous APY they are being offered. Before anything else, staking is subject to all types of risks associated with cryptocurrency investments in general, such as sharp volatility and unsustainable liquidity of your staked coins.
That’s true. Adverse and unexpected price movements can devastate your staking portfolio. For example, the exchange is offering you a 12% APY for staking, but this means nothing if the cryptocurrency price drops by 60% throughout the lock period.
Liquidity supplies are also a critical factor in staking cryptocurrency because sometimes the current market behavior can totally deny your trading strategies. The high APY will end up being completely useless if you can’t cash out your earned coins after the locking period.
Finally, the duration of the locking period can be critical for the benefit of holding that cryptocurrency. You can lock the staking crypto for an excellent interest rate and high hopes for future prospects. Your personal estimation can turn 100% correct, but unfortunately, such rapid growth of the staked crypto will negatively affect your overall investment.
It’s simple math; you will earn a much higher profit from selling the crypto rather than waiting for the interest rate. However, at that point, you won’t be able to use the staked funds since they’re locked. A year in cryptocurrency equals an era in the traditional stock market.
What Is APY in Staking?
In a broader sense, we use the term interest rate to refer to any amount of interest you can earn per a given period. However, crypto staking schemes usually use annual percentage yield (APY) as a method of determining the number of crypto assets you earn on a money market account throughout the year.
The APY technique is used in the traditional financial market, and it actually follows how your interest accumulates in the locking period. Here, we’re talking about compounding interest, which covers both the interest received on your initially staked amount and the interest accumulating on your account over time.
Each crypto exchange offers an introductory APY on an individual scale, so you should pay proper attention to it before investing. Some of the staking plans employ a strategy that offers an attractive initial APY and lowers the rate immediately after reaching a large base of customers.
Have a look at our crypto staking calculator to see potential returns with customisable inputs and some nice graphs 🙂
How to Stake Crypto
Crypto staking may sound a bit confusing at first, but it’s actually a pretty straightforward process that doesn’t require on-chain expertise. After all, that’s why we call staking a passive form of income. Even though the most convenient staking approach is to rely on a cryptocurrency exchange, there is also an option for offline staking. Stay tuned, as we’ll go through the basics of both of them.
How to Stake Crypto on a Cryptocurrency Exchange
Before engaging yourself in crypto staking, you should have a clear vision about the crypto you’ll stake and the exchange that suits your trading style the best. The pattern is nearly the same on all marketplaces:
- Read the staking requirements carefully — for example, learn about the minimum staking amount of the digital currency of your choice. The transition of ETH to PoS is extremely popular among avid crypto players these days, but the minimum amount of your investment can’t be below 32 ETH. Given the relatively high ETH price, this looks like a large-scale investment.2
- Download a crypto wallet to ensure storage for your rewards.
- Also, make sure your internet connection is stable enough because if you suddenly go offline and don’t reconnect fast enough, the interruption may cost you losing your block reward.
- The good thing about using a crypto exchange for staking is that it will activate and handle the entire staking process on your behalf once you deposit the necessary amount and meet the internet requirement. Keep in mind that you won’t be able to transfer your allocated amount to other wallets during the locking period.
How to Stake Crypto From a Cold Wallet
Hardware wallets are the most secure storage solution for your cryptocurrency. You may have heard that some hardware models do allow in-wallet trading without transferring your coins to your exchange account, which is the case with staking too. While Ledger, Trust Wallet, and Cool Wallet S enable this option through their own official interfaces, Trezor makes staking possible in an official partnership with the Exodus software wallet.
Staking and hardware wallets make a best-of-both-worlds combination as you can earn passive income by keeping your crypto assets offline. Just remember to keep the coins within the same address because shifting them will terminate the locking period and cause you to lose your existing staking rewards.
With an APY of 8-10% and 10% for DOT, Ledger is perhaps the best offer on the crypto market today. The hardware-wallet staking on Ledger is also a few-steps process:
- Install the appropriate coin app on Ledger;
- Create an account on Ledger Live — the official Ledger software app for the management of your stored digital assets;
- Transfer the desired amount of cryptocurrencies on Ledger Live and navigate to the Stake section. As simple as that.
Can staked crypto be stolen?
Technically, it is possible, but not very probable now that all exchanges on our top-staking list apply the highest security measures for virtual platforms.
However, staking means keeping your funds on an in-exchange account or wallet, which operates online, thus becoming the desired target for internet scammers, thieves, and technical errors. So, we can consider safety as a plus one risk factor apart from those listed above.
Is staking crypto taxable?
Some governments are more advanced in providing a legal framework than others. In both regulated and unregulated markets, Bitcoin and other cryptocurrencies aren’t considered legal tender but a commodity that can be used for trading, swapping as well as staking. Accordingly, any profit you’ll gain from staking is a taxable event.
What is a staking pool?
A staking pool is a term used to describe a type of PoS participation mechanism. It’s simply a combination of assets put together by multiple stakeholders to enhance their staking power. In PoS networks, the number of held coins is a deciding factor for the staking power, and hence, the total number of rewards a stakeholder can earn.
Staking pools can be either public or private, but in both cases, they’re run by pool administrators who deduct a portion of your reward as a fee. The APY is usually lower when staking through a pool, but your chances of verifying a block are much higher than individual validators.
What’s the highest staking reward I can earn?
There is no straightforward answer to this question as the amount of the staking reward depends on multiple factors: the coin being staked, the provider through which you’re staking (exchange or individual cold staking), the number of stakeholders present on the network, and the demand for that coin at the time of staking.
All exchanges we’ve listed in this article have some lucrative offers where you can earn over 10% APY on certain coins. When it comes to the choice of the most lucrative coins, we recommend Ether and Cardano for the long haul.
Can I stake Polkadot?
Polkadot (DOT) is a PoS-powered cryptocurrency and one of the most attractive staking options. You can stake DOT through multiple platforms such as Binance, Kraken, and Ledger Live, with an average yield of 10%.
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Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.