The contemporary cryptocurrency industry is valued at $1 trillion. Over the last decade, it has been continuously growing to attract millions of traders from all across the globe. It turned into a financial market where millions of trades are conducted each minute. Despite being considered speculative, the domain managed to create a variety of ways to make passive income.
There are several main ways to generate income using cryptocurrencies, but the most commonly used is earning crypto staking rewards. Selecting the right crypto assets with the highest APY can significantly impact profitability while also acknowledging the associated risks. There are surface-level similarities between staking and depositing money in a bank. These similarities made it easier for the general public to get accustomed to the principle and start investing.
Before we discuss the best crypto-staking platforms out there, we should talk about passive income and interesting investment products that allow users to generate income without active participation. There are three main methods.
Introduction to Staking
Staking is a process in the crypto world that allows investors to earn passive income by supporting blockchain networks. By staking their crypto assets, investors can contribute to the security and operation of a blockchain network, and in return, they receive staking rewards. These rewards can be in the form of additional tokens or coins, and they are typically distributed based on the amount of crypto assets staked. Staking is a key aspect of the Proof of Stake (PoS) consensus mechanism, which is used by many blockchain networks to secure and validate transactions. This method not only helps in maintaining the network’s security but also provides a steady stream of passive income for the investors. By staking, you are essentially locking your assets in a wallet to support the network’s operations, and in return, you are rewarded with more tokens, making it a win-win situation for both the network and the investor.
Benefits of Staking
The benefits of staking are numerous, and they include the potential to earn high yields, receive additional rewards, and contribute to the security and operation of a blockchain network. Staking also allows investors to maintain control over their crypto assets, as they are not required to sell or transfer them. Additionally, staking can provide a sense of community and involvement in the crypto ecosystem, as investors are actively contributing to the network’s security and operation. With the rise of liquid staking, investors can now stake their assets while maintaining liquidity, making it easier to access their funds when needed. This flexibility ensures that your assets are working for you, generating returns, while still being accessible for other investment opportunities or emergencies.
Holding coins
It is not a way to create passive income. Not, in a receding market. However, it is the most conservative way of investing with the potential for a steady passive income stream if the stars align in the right way. Most people who even heard about crypto know the term “hodl”. It refers to a method of investing in which you buy as much bitcoin or other popular coins and hold waiting for them to appreciate.
With high expectations and many examples of explosive growth, this strategy seems reasonable and reliable. However, it works only during strong uptrends. Otherwise, your risks increase with each day of a continuous bearish movement. Despite what many crypto investors say, holding is not a passive income strategy, nor is it a sound investment plan for long-term earnings. Assessing risks and aligning staking practices with financial objectives can significantly impact your cryptocurrency holdings.
Using automation
Bots are a great way to create passive income. There are massive advantages to using automation in trading, especially when it comes to scalping or intraday trading. Both methods rely on working on very short time frames (1, 5, or 15 minutes) while reducing risks by using stop loss orders. Scalpers usually aim at about an 80% success rate whereas even trades are also considered successful. You take whatever profit you make and cut losses immediately to avoid significant damage to your portfolio. Crypto exchanges play a crucial role in facilitating automated trading and staking, making them essential for executing these strategies effectively.
Why do traders employ automation?
Bots do not have to rest which is a great advantage in a market that operates around the clock. Opportunities to enter the market occur regularly even when you sleep. Missing out on them can be harmful to your overall strategy and significantly reduce your potential gains.
Machines are better at acting on received inputs. Humans tend to overthink market analysis data and take a lot of time to comprehend some information, especially when it seems conflicting. These delays can create a price disparity detrimental to your strategy. Robots do not make such mistakes. Transaction fees can also impact your overall returns, especially when using non-custodial wallets for staking.
Maintenance is very cheap. Just two decades ago only professional traders and financial institutions could afford to employ automation on stock markets. Contemporary investors can get a subscription for just over $10 per month. Even free options are available. For example, WunderTrading has a free plan with up to 7 bots included.
Automation is one of the greatest tools available to modern active investors. Results may be less lucrative than the best crypto staking rewards, but reliability and consistency are much higher. To top it all off, automation can be easily used on the biggest exchanges like Binance, KuCoin, Coinbase, and others.
Crypto with staking rewards
The final and most relevant to our discussion is the topic of the best ways to stake crypto. What is staking? It is a process of locking your staked crypto assets in place and adding them to the liquidity pool of a platform that offers staking rewards. This accomplishes several goals:
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A liquidity pool is important for any exchange or a DeFi service relying on moving around assets. Having sufficient assets is crucial to keeping any ecosystem in a healthy state. Most companies offer significant rewards to users who decide to contribute to liquidity pools. Such rewards easily outpace inflation and bank deposits.
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Investors receive a source of steady income. If you have excess assets or want to stay away from trading while earning money, staking is one of the best solutions. You put away unused resources and allow exchanges to tap into them for a small fee. Some platforms run a system where fees scale with the demand on the market, and the highest staking rewards are usually paid out by such services.
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The ecosystem of staked coins enjoys higher interaction rates improving its health and dynamics. When conservative investors take out liquidity, they create an environment where a large portion of coins is nonexistent in the market. It may seem that such situations increase scarcity, but the effect is usually the opposite: people lose interest in ecosystems that don’t have much movement.
This method of generating passive income is the healthiest for the industry as it benefits all parties without creating any significant downsides. Some disadvantages compared to automation include lower potential gains, the inability to use resources for up to 6 months, and higher investment costs.
Where to stake crypto
Crypto exchanges are among the notable platforms that allow users to stake their coins. Some financial startups allow staking within their ecosystems, but investors will be more interested in exchanges. Below are the 5 best exchanges for staking.
Kraken
The platform features 16 different coins that can be staked. Since the liquidity pool contains assets with different levels of demand, returns depend on the intensity of trading that involve specific coins. You may receive up to 23% interest depending on the type of coin you stake. If you are interested in using Ethereum or Cardano, you will be enjoying a steady 6% interest during peak demand. Users can track their rewards and staking activity directly within their accounts.
The absence of any insurance for locked funds is a worrying sign, but you also don’t have to lock your assets for any period. You choose when to stake and when to stop staking your coins. The exchange has one of the best crypto-staking coins — Ethereum which is not available for these purposes on many other platforms.
Gemini
Focused on keeping its ecosystem dynamic and attractive to investors, Gemini offers its users to stake 47 different tokens including some obscure projects that may have escaped your attention. Yields also change depending on a variety of factors. Since some of the most promising tokens can be staked, you have two potential ways to increase your portfolio: through APY (annual percentage yield) and the appreciation of assets.
Solano is a great example. Some experts believe that the project is capable to grow by over 150% within the next three years. At the same time, the APY is 4.55% on Gemini. If you stake your coins now, you will enjoy a massive increase by 2025. Entering projects during their initial stages or presales can offer better rates and benefits, highlighting the importance of timing in maximizing potential returns.
Binance
Considered by many the biggest exchange in the world, Binance has over 100 different staking products with different rewards and a rich selection of coins including Solana, Sushi, Lever, Cardano, and many more. Annual percentage rates, minimum locking periods, and amounts vary depending on the coin you choose. For example, you can stake SOL at a hefty 19.47% annual percentage rate for up to 120 days with the lowest amount possible 0.01SOL.
In terms of usability, it is the best app to stake crypto. The rules are very simple. You subscribe to the staking program, choose coins that you want to lock, and receive interest when the period of staking expires. Binance has some of the highest APRs out there. You get 29.99% on NEAR, 40% on ACH, and 73.99% on GLMR. Some rewards are distributed in different tokens. For example, you earn BNB for staking CHESS and BTC for STX. Binance offers some of the highest staking yields, making it a lucrative option for investors.
CoinBase
The exchange does not have an extensive staking program. It features only 6 tokens that can be staked, but the list is expanding. Currently, Ethereum, Algorand, Cosmos, Tezos, Solana, and Cardano are available in the staking program. APYs are different for each asset. The highest staking crypto on Coinbase is Algorand which has a healthy 5.75% APY. The lowest return is expected from Cardano with only 2.6%.
The most important attraction of the platform is the low entry bar. You don’t need massive capital to start investing. You can start with $1. You won’t earn much with a small initial investment, but the fact that you can begin your journey with only a buck in your pocket is quite reassuring and attractive. The difference between asset prices and annual percentage yields (APY) is crucial for understanding potential earnings and the valuation of staked assets.
Liquid Staking and Flexibility
Liquid staking has emerged as a popular trend in the crypto space, allowing investors to stake their assets while maintaining liquidity. This means that investors can stake their crypto assets and still have access to them, allowing for more flexibility and control. Liquid staking protocols have attracted significant attention and investment, and they offer a range of benefits, including higher yields, additional rewards, and increased flexibility. By using liquid staking, investors can earn rewards while still being able to trade or use their staked assets, making it a more attractive option for those who want to maintain control over their crypto assets. This approach combines the best of both worlds: the ability to earn passive income through staking and the freedom to access and utilize your assets as needed.
Reward Rates and APY
Reward rates and APY (Annual Percentage Yield) are key considerations for investors who want to stake their crypto assets. The reward rate is the rate at which staking rewards are distributed, and it is typically expressed as a percentage of the total staked assets. APY, on the other hand, is the rate of return on investment, taking into account the compounding of interest over time. Investors should carefully research and compare reward rates and APYs across different staking options to make informed decisions about where to stake their assets. By understanding the reward rates and APYs, investors can maximize their earnings and make the most of their crypto assets. It’s essential to look at both the immediate reward rates and the long-term APY to ensure that your staking strategy aligns with your financial goals and risk tolerance.
Most profitable coins to stake
The variety of assets in the contemporary crypto industry is quite impressive. With thousands of different NFTs and coins, one can be easily overwhelmed with the richness of choice and the sheer number of opportunities to make steady passive income an objective reality. However, it is important to identify the best cryptos to stake. Acquiring whole units of these digital assets, as opposed to fractional amounts, can be particularly beneficial, especially with platforms like Nexo offering savings and staking rewards.
We decided to put together a list of top proof of stake coins that can be used for conservative investments in the crypto domain.
BNB
Released by Binance, this particular token is used to provide liquidity to the exchange. BNB yields about 7—8% annually, but there are moments when APR increases due to higher demand on the market. The rate can go up to 30% depending on the circumstances. BNB is used primarily on the exchange as an intermediate asset or for buying and selling other products including unique native NFTs. The reward rates and other important parameters are determined by the blockchain protocol, ensuring they are not arbitrary but set by specific rules and mechanisms.
Currently, the market cap of BNB is $46.8 billion and the price has been fluctuating between $240 and $450 over the last 6 months. Despite volatility, the coin has been consistently rising in value and reached its all-time high of $675 in 2021.
Ethereum 2.0 (ETH)
Created not for a single purpose of keeping a massive ledger alive, but to be a thriving ecosystem and foundation for many other crypto projects, Ethereum is certainly one of the most promising coins out there. Switching to proof-of-stake made it quite interesting to many investors who want a reliable source of income through staking ETH. ETH is also an appreciating asset that promises to bring even more value to stakeholders.
APYs for this coin is quite low on most platforms. For example, you can get 3.675% APR on Coinbase or 2.5% on ByBit. Many conservative investors are looking into this financial instrument to ensure that they have a very valuable portfolio in a couple of years. While it is not crypto with the highest staking rewards, the promising future makes up for low APY.
Moonbeam (GLMR)
This token serves as a native utility token on the Moonbeam network. The ecosystem is still growing and building toward a promising future. GLMR is traded on multiple exchanges but can be staked for impressive returns on Binance. When seeking the most profitable coins to stake, you should decide whether you need the highest yield or the highest profit in fiat currency. If you believe that Moonbeam will appreciate significantly, it is the most lucrative coin out there. Users can engage in staking activities to enhance their experience and potential returns.
The current APY for GLMR on Binance is 73.99% which is a temporary value, but you can get a massive surplus of coins by staking them on the exchange. Moonbeam is a network that creates opportunities for developers. It is not as easy to understand as Bitcoin. However, those who see its potential of it, will gladly become stakeholders.
USDC and USDT
When it comes to identifying the best stablecoin for staking, USDT and USDC are both candidates for this role. Stables were introduced as a way to battle market volatility and create a reliable medium between fiat and cryptocurrencies. Their value is inherently tied to USD and the ecosystem requires sufficient liquidity to function.
APY for stablecoins is quite low. For example, Binance is offering 1.18% for USDT and 1.57% for USDC. Such low numbers are justified by sufficient supply. However, you can stake them whenever you want and choose any period. The flexible lock is one of the reasons why many stake them. It is important to understand that the unstaking process must be complete before you can sell or send your staked assets.
Honourable mentions
BUSD can be used to get a 13.33% return on Binance. It is a good native stablecoin that has a promising future.
Algorand is often considered a coin with the highest potential. It can be staked for 5.75% APY on Coinbase.
Cosmos is another promising platform. Its tokens are available for staking on Coinbase for 5% APY.
Cake is a coin that Binance heavily supports. Currently, you can stake it for 79.89% APR by locking it for up to 120 days starting with 0.1CAKE.
SAND is a regularly appearing option in the list of locked staking coins on Binance. It has up to 14.5% APR.
When choosing a cryptocurrency to stake, it is also important to consider how the platform simplifies tax reporting.
Do you need to get the highest crypto staking rewards?
When it comes to staking, the main priority is to determine whether you need coins or money. There are two different approaches to the staking method.
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You focus on accumulating assets. If you are interested in the crypto industry and believe that it has the potential to create continuously appreciating assets, staking coins with the highest return is a good idea. Locked staking on Binance is a great product with over 100 different coins with very high APY. If you want to get on board, these assets are the best at accumulating quickly. Use DCA bots to purchase them slowly and you will gather a whole bunch of tokens within a year or two. The estimated APY is a key statistic to attract potential investors by showcasing the high returns associated with stakable assets.
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You focus on earning money. Staking can be a source of additional income. However, you should work with assets that are flexible and can be locked for any period. Trading will most likely be your main activity, but when you take pauses or have idle assets on your hand, staking them is a good idea. Already valuable tokens like ETH, BNB, USDT, and BUSD can bring more tokens that you can sell for profit.
The choice between long-term and short-term investing strategies is quite challenging. Newcomers often chase big numbers and get pulled into shady projects that don’t have any good prospects. At the same time, many miss out on flexible locking and hold on to their stablecoins not allowing them to work and generate value.
Some tips for staking
A good staking pattern is to purchase certain coins for the long term and stake them by locking them for a long period. It is a way to quickly gain more tokens without doing anything. Purchasing cheap coins when they dip is a good way to bet on high returns, but also the riskiest endeavour. Going all-in is never a sound financial plan. Instead, set aside your disposable income, put it in promising coins, and use a DCA bot to slowly accumulate more. Earning rewards through staking is a straightforward and beneficial way to grow your assets.
Another good strategy is to use your idle assets or coins that you plan to hold for staking on reliable vendors like Binance or Coinbase. The idea is quite simple: if you already have coins that you want to save, why not let them work for you? Most popular financial instruments can be locked for any period allowing active traders to benefit from staking.
Never use untrustworthy services for staking. Most established exchanges have dedicated sections on their platforms where you can stake your coins. Double-check your actions every time. Unfortunately, the crypto industry is full of bad actors and scammers. Do not allow them to take advantage of you. If you see an ad that invites you to stake coins on an obscure platform that you have never heard about, put more effort into researching and inquiring about it!
Never stake assets that you use for trading. Some traders think that they can game the system by using flexible locking to their advantage. However, there are delays and other issues that may significantly disrupt your trading patterns. Traders are waiting for opportune moments and missing out on some of them can be devastating to their portfolios in the long run.
Some final thoughts
Staking is a relatively new branch of the crypto industry. However, it gained popularity after Ethereum switched to proof-of-stake and pushed many other projects in the same direction. Many hardcore crypto enthusiasts believe that this development is not the best for the industry as a whole. On the other hand, conservative investors were happy to have a new way to generate value by using their already accumulated resources. Participating in on-chain staking can secure networks, generate rewards, and involves staking assets directly on various blockchain protocols.
Newcomers should look into other ways to earn money with crypto. Using bots is a much better way to build a portfolio. If you have some time to learn technical analysis and can afford to pay for automation services, you will most certainly benefit from active trading more than you would gain from locking small amounts of coins for a measly 10% APY.
