Staking Crypto is an act of holding cryptocurrencies in a digital wallet in order to keep up functioning of a blockchain network. In simple words, staking cryptocurrencies is a method of earning rewards by keeping your money in form of crypto coins instead of your wallet or saving or trading accounts. Compounding will help you to earn rewards on your rewards earned in past.
Advantages of Staking Coins
First and most important advantage of staking cryptocurrencies is to earn rewards. You just have to select and hold coins; few coins also require completing some bonding period. Once you finish bonding period (if applicable) you will start earning rewards on weekly or monthly basis. Compounding concept which you have learnt in your school days is going to help you now.
You might have forgot that so in simple words you either pay or gain interest over interest on period basis. So, you will receive next rewards on your current holding plus rewards earn this week. You will end up with exponential growth in your holding as time passes. Reward might look very less in single digits like 2 or 3, but if you have patience to stake your coins for longer duration, you will get good amount of profit/return over your investment.
PoW Vs PoS
Before directly jumping into comparison let’s understand what PoW and PoS are. Both are mechanisms to support blockchain operations in different ways. Proof of Work mechanism requires mining for validation of new block while on other hand Proof of Stake do not require any kind of mining as it chooses next validator based on largest and long-term staking candidate. We have provided difference or comparisons in tabular format below. We have compared PoS and PoW based on parameters like scalability, reward winner and security etc.
|Validation of new blocks depends upon||Miners and their computing power||Stake holders staking capacity|
|Scalability||Less compared to PoW||Highly scalable compared to PoW|
|Security||More secure||Less secure compared to PoS but can be enhanced using Protocols|
|Computing Power Requirement||Very High||Negligible|
|Rewards||Miners earn rewards for identifying new blocks||Stake holders get rewards on weekly or monthly basis for their investment.|
How Staking Cryptocurrencies Works?
Staking is process of investing your money in cryptocurrency for its functionality. Major advantage of staking over PoW is there is no more need of hardware computers to mine next block for validation of cryptocurrency transactions. This ability makes cryptocurrency networks to grow without any cryptocurrency miners only there is need of committed and long term investors/stake holders.
This advantage gives power to PoS mechanism cryptocurrencies to scale up with more speed. There is possibility of any stake holder buying almost all crypto coins in market but fundamental of cryptocurrency networks help in this case. As price of coins goes high if there is huge demand which makes job of attacker very difficult to but all coins and take control over it. Also few protocols can be set to punish those kind of attacker in order to secure PoS based cryptocurrency networks such as Ethereum Casper protocol.
Best Coins for Staking
Below listed coin generate passive income by just staking coins for 365 days and we provided details of every best staking coins sorted by staked percentage status.
- Tezos: in short terms Tezos already established as best ever proof of Stake based Blockchain platform backed by Tim Darper and Olaf Carlson who is board member of Tezos Platform. So, crypto user is getting treat in the form of staking and many new exchange platforms also offering crypto staking to users. Overall Tezos is offering great technology with formal verification, governance, and polymorphic protocol.
|Staking Return||5.9% yearly|
|Staking Provider||Binance Staking, Everstake, Stakin, Bit Cat, Stake.fish, Figment Network|
|Staking Wallet||Atomic Wallet|
- Decred: New innovative network based on hybrid mechanism, which uses both Proof of work and proof of stake system. PoS overlay dependent of PoW timestamping so can it can achieve consensus, as Bitcoin protocol modifies the consensus mechanism that can go two ways either completely or partially use PoS. this idea was implemented in 2012 by kind and Nadal. In t Staking process 5 Validator in system will be chosen to verify the block, in that 3-validator consent to validity of the block. In the Block reward distribution 60% goes to miner, 30 to validator, 10 goes to project fund.
|Staking Reward Return||7.75% yearly|
|Staking Provider||Everstake, MXC, HashQuark, HyperPay, Staked, Cobo.|
|Staking Wallet||Yield wallet|
- Synthetix Network Token: SNX after providing huge percentage in Staking sees ranking boost and now officially enter into top 50 biggest crypto list. It is based on very unique platform which uses decentralized synthetic asset insurance protocol build using Ethereum codebase. The provide freedom to all SNX holder to stake their tokens and they are paid a pro-rata portion of the fees generated on Synthetix Exchange platform. All trade generated transaction fees on exchange platform that is sent to a fee poll and this will available for SNX holders to stake SNX staking rewards.
|Project name||Synthetix Network Token|
|Staking Reward Return||51.39% yearly|
|Staking Provider||Just mining|
|Staking Wallet||Trezor, coinbase wallet.|
- Harmony: Based on linear BFT consensus protocol, which is claimed to 100x faster than PBFT uses PoS. Harmony has fully scalable, secure sharding, adaptive-thresholded Proof of Stake, networking infrastructure, consistent cross-shard transaction. The Harmony FBFT consensus has four steps including announce, prepare, verify and commit phase. Validator of consensus are selected based on proof of Stake, which can be different from actual protocol. the project was launched in 2018 with fundraising program it able to raise $18 million, as project have big name in investor list including Silicon Valley and Lemniscap vc. Ecosystem is aiming to focus on various market such as Data sharing, Supply chain, Ad market, Gaming and Decentralized application.
|Staking Reward Return||13.43%|
|Staking Provider||Validator.center, Bit Cat, Bitmax Staking, Mitera,net. Binance Staking, Figment Network, Chainode Tech, Honest Mining.|
|Staking Wallet||Harmony One Staking Wallet|
- Cosmos: Network which created b different independent blockchain platform also called as Zones, it is powered by Tendermint core provide high-performance secure PBGT consensus engine. This BFT consensus is compatible for scaling proof of stake mechanism. In combination of zone, first zone denoted as Cosmos hub and this hub is multi-asset Proof of Stake coin with follow simple governance mechanism. Cosmos ICO got huge response in early 2017, where project was raised by $17.3 million USD and in the list of most successful ICO that time. in the list of biggest crypo list sorted by market cap value Cosmos in on 25th position.
|Staking Reward Return||8.39% yearly|
|Staking Provider||Stakin, Mitera.net, BTC.secure, P2P Validator, Cex.io, Bit cat. Everstake, Stake.fish, Hotbit, Stake capital.|
|Staking Wallet||Atomic Wallet|
- Waves: its open-source blockchain platform offer a pre-designed tool to create web 3.0 Decentralized applications and games, as they offer immediate token creation platform, where token can be created in 1 minute. They also have decentralized exchange platform, where newly launched blockchain based token can traded with Waves token. the network was launched in 2016 after fundraising by different venture and ICO event. Waves proposed enhancement to the PoS protocol to reduced transaction time and increase TPS. In the Proof of stake mechanism, every node who have balance in the mainnet token can produce a block, at same time other all non-zero balance nodes also allowed to stake rewards.
|Staking Reward Return||5.7% yearly|
|Staking Provider||Waves Exchange, Mycointainer, SNZPool, Stir|
|Staking Wallet||Waves Wallet, Trust Wallet, Ledger.|