Many investors not only want to buy cryptos but also want to trade them. Why should I discontinue cryptos? In a nutshell: with crypto staking, it is possible to hold cryptos in a staking pool or wallet to contribute to the network’s security. Based on the contribution (stake) that is used, compensation can be earned on a random or regular basis in the form of, among other things, an annual interest.
What is staking in crypto?
Cryptocurrency staking can be compared to holding savings in a savings account. This allows you to earn passive income. You do not earn interest in euros, but in the cryptocurrency, you are staking.
The exact functioning of crypto staking is related to the design of the specific cryptocurrency you are staking. In principle, it goes back to exactly which Proof of Stake (PoS) consensus algorithm has been implemented by the developers to maintain and secure a blockchain.
Unlike a Proof of Work (PoW) blockchain, such as Bitcoin, built and co-protected by the specialized computers (miners) that use computing power to mine bitcoins, a PoS blockchain puts its users’ assets a stake. Fund for special computers called validators. These validators process the transactions and maintain the blockchain. The algorithm selects poS validators, usually based on the size of the staking fund. There are PoS blockchains where each user can stake directly from their wallet. There are also blockchains where the stake is used to designate specific validators who, as delegates, deploy a large fund as a stake and stake the coins for the delegates. This is made possible by a Delegated Proof of Stake (Dpos) consensus algorithm. EOS is the best-known example of an implementation of a Dpos algorithm. Cardano is the most notable example of an implementation of a Proof of Stake algorithm. These algorithms can be further developed and customized. That’s what Cardano’s PoS algorithm is called Ouroboros.
Sunny King and Scott Nadal developed the first Proof-of-Stake algorithm and a staking coin in 2012. It used the algorithm in combination with a PoW algorithm in the Peercoin project. Peercoin is a classic altcoin project and uses a hybrid PoW/PoS consensus algorithm. The first implementation of a Delegated Proof of Stake (Dpos) algorithm was developed by Dan Larimer and implemented in the Bitshares protocol.
Benefits of crypto staking
One of the most significant advantages of crypto staking is that all users within the network can earn staking rewards. Within a PoW blockchain, it is only the miners who earn from securing the network. Anyone who wants within a PoS blockchain can put in part or all of it as a stake to
passively earn coins. How much this is and when the automatic payout takes place depends on the project and the annual inflation. Many PoS networks base staking rewards on a fixed inflation rate. This makes it more attractive for users to hold the cryptocurrency (HODL) as an investment and actively stake it. This process discounts the operational costs to all cryptocurrency stakers. This method has the advantage that all stakers know precisely how much they will earn in interest annually.
A PoS blockchain and network also require less computing power and energy to maintain, making it easier for virtually all computers to contribute, resulting in better network decentralization.
A PoS blockchain and network can produce blocks much faster and, therefore, process transactions. This makes the network easily scalable. It is better to add a programming layer for decentralized programming applications that can be used on a massive scale without causing disruptions or delays. A PoS blockchain is very suitable for decentralized social applications, games or Defi applications. For this reason, Ethereum, a PoW network, will implement a PoS algorithm and migrate to a new PoS network.
Best staking crypto
In a nutshell: Ethereum 1.0 is an excellent distributed application network but is threatened by its success. The network is overloaded and expensive to use. Developers are relocating or co- using competitors’ networks. A successful upgrade to 2.0 would mean a lot for the further future of the project and clear the air. Now it is still a risky investment in an up-and-coming project. Ethereum can already be stopped to earn a passive return.
Cardano staking – staking ADA
ADA’s discontinuation of the Cardano project is widespread. This is not surprising since it is an excellent project developing an innovative contract platform from a scientifically tested and research-oriented approach. Cardano offers a distributed public blockchain and crypto project that is entirely open source and has potential. If you have bought ADA for the long term and want to earn passive income, discontinuing Cardano (ADA) is a good idea.
Vechain – staking crypto
VET’s cessation of the Vechain blockchain project is popular. This is not surprising as Vechain is making progress every year and is already operating globally in several countries with the help of strategic partnerships and concrete BaaS projects, mainly in logistics and product authentication. A concrete example is a collaboration with the Italian pasta producer De Cecco for independent product verification.
Tezos – crypto staking
Stake Tezos (XTZ) has become popular. Many investors believe in the future of this blockchain project. It is a well-developed modular blockchain that makes smart programming contracts and maintaining decentralized applications easy, thanks partly to the implementation of flexible, functional programming languages.
Polkadot – best staking coins
Investors who believe in a positive future for Polkadot are not just buying DOT but are holding it for the long haul. Polkadot staking allows investors to passively earn a high return in DOT in the form of interest payment on top of the appreciation of DOT itself as the ecosystem attracts more capital and the network effect increases.
Where to stake?
Binance has two forms of staking. Binance staking and Binance Savings. Binance Staking offers a limited number of cryptocurrencies that you can stake, and the percentage changes constantly. You enter into a so-called smart contract, and you can see the current percentages via Binance Defi Staking. These contracts are often sold quickly. It is easier to stake crypto via Binance Earn. Here you can stake many cryptos just like at Coinbase.
Locked vs Flexible Stake
With flexible staking, the interest rate is lower, but you can sell your cryptos at any time if necessary. With Locked staking, the interest rate is higher, and you can also sell your cryptocurrency at any time if you want. But if you do this, the interest you have accrued during the staking period will not be paid out to you.
We advise everyone to turn on flexible savings via the app in any case. You do this by pressing “automatic deposit”. This automatically gives you interest in your cryptos, and you can still sell them whenever you want. You can flexibly discontinue (almost) all cryptocurrencies. You can only stake a limited number of cryptocurrencies locked.
Staking on Coinbase generally yields the most as far as the exchanges are concerned. The crypto stake rates are the highest here. Coinbase offers a flexible stake period and a 1 or 3 months fixed stake period. If you are not a day trader, we recommend that you lock up your cryptocurrency for three months after purchase.
Firstly, staking on Coinbase ensures a fixed interest rate on your cryptocurrency, and secondly, it leads to less stress and fewer emotional trading transactions. You cannot sell the cryptocurrency at Coinbase for three months after discontinuation, and this gives (us) a lot of peace of mind. So now you know how to stake on Coinbase.
Celsius Network is not a crypto exchange, but you can think of it as a software wallet, crypto bank and staking platform in one. You can open a wallet here, put cryptocurrency on it, stake it and earn a specific interest on this.
Stake rates at Celsius Network are generally higher than most crypto exchanges. Compare the percentages below with the percentages of the crypto exchange you are currently using. We define Celsius Network as a crypto bank because you can even borrow money or cryptocurrency here.
BlockFi is similar to Celsius Network. You can also see BlockFi as a cryptocurrency bank or a pure stake platform. The interest rates at BlockFi are generally slightly lower than at Celsius Network, but check out the calculator on the BlockFi website to see for yourself exactly how much you can earn if you stake your cryptos with BlockFi for ten years. Below you can find the BlockFi interest rates.
We recommend Crypto staking to everyone because you earn an extra fixed return on your cryptocurrency while you do not have to do anything for it. You can place your cryptos with staking platforms like Celsius Network or BlockFi. These are crypto banks where you get a high- interest rate on your cryptocurrency. You can even borrow money or crypto coins here.
While Celsius Network is the best staking platform, Coinbase generally offers the best staking interest rates among exchanges. For example, for USDT, an almost stable coin, you get a fixed interest rate of at least 10% p.a. You also have to store your cryptos for a certain time. This is not necessary with Celsius Network and BlockFi. This makes these staking platforms a better choice for most people.
Binance offers desirable staking terms in terms of flexible staking. If you always want to keep complete control over your cryptos and trade when you want, flexible staking of Binance is an excellent choice. Fortunately, you can now stake on almost every crypto exchange so that you can compare the conditions and interest rates. The stake percentages sometimes differ per exchange, as you have been able to read. We mainly traded on Celsius Network, Coinbase and Binance.