The Best Crypto Staking Platforms for 2022 Compared
May 18, 2022
If you’re new to the crypto space then you might not have run across the term ‘staking’. But what is crypto staking and how does it work? Staking is a process of locking up crypto holdings to earn rewards and interest. Pretty much like depositing money in a bank but with a much higher interest rate.
In this guide, we’re going to explain what staking options exist and how you can choose the best staking platform for your needs.
What is staking?
Before we begin, it’s essential to understand the concept of blockchain technology. Each cryptocurrency runs on a blockchain. A blockchain is a huge ‘database’ of transactions. This 'database' is immutable and distributed to thousands of computers around the world. The computers are updating it and making sure each copy is exactly the same as the other ones. Verified transactions become new blocks on the blockchain.
Mining vs. Staking
Crypto staking is a system used to validate proof-of-stake (PoS) blockchain transactions. You deposit coins for a fixed period of time to earn interest. This process is similar to crypto mining. It helps the network reach consensus and rewards users who take part in it. In staking, the right to verify transactions depends on how many coins get locked inside the wallet.
Like with mining, participants get rewards for finding new blocks or for adding transactions to the blockchain. In addition to having a reward system, PoS blockchain platforms are scalable and have high transaction speed.
Did we lose you here? Fear not, let’s break it down for your better understanding.
Mining and staking are both “consensus mechanisms.” These mechanisms confirm that transactions are legit and that there is no double-spending.
First off, mining. How is it different from staking? Mining is a process that ensures the performance of blockchains running on the Proof-of-Work (PoW) algorithm. The first cryptocurrency, Bitcoin, works on this algorithm. During mining, your computer tries to solve a very complicated mathematical calculation. The first miner who comes up with the solution gets some bitcoin as a reward. Miners use expensive and complex equipment and special software to make these calculations. The more computing power you have, the easier it is to mine.
Staking doesn’t need as much computing power. This makes it a more green and energy-efficient way to create a new chain of blocks on the blockchain. And, as mentioned earlier, the algorithm is different. It's called Proof-of-stake or PoS.
How does staking work?
We’ve established that staking is how new transactions are added to the blockchain that uses the proof-of-stake model. But how does it work exactly? Participants first make a pledge to the protocol using their crypto. The protocol then selects validators from among these individuals to confirm transaction blocks. The more coins you pledge (well, stake), the higher the chance you’ll be chosen as a validator. Yeah, like with lottery tickets. Verified transactions become new blocks on the blockchain. For cryptocurrencies that support staking, PoS is necessary. Whoever participates in successfully creating a new block gets a reward in crypto. If the block turns out to be bad, the stake is lost in what’s called a ‘slashing’ event.
This is to ensure that stakers get rewards for picking out trustworthy validators, and punishment for backing bad ones. There are several different ways to take part in staking without needing to be a brainiac or dealing with technical limitations. We'll cover them a bit later.
Which crypto assets support staking?
Tezos, Cosmos, Polkadot, Solana and Ethereum 2.0 all use the proof of stake method. You can stake these currencies and many more cryptos in exchange for an interest rate.
Types of crypto staking platforms
There exist several means of getting started with staking. Let’s look at a few of the more common.
Exchanges offer the most straightforward point of entry for future stakers. You can state the amount you’d like to stake. In return, the exchange will find a validating node on your behalf. The exchange is an intermediary between the staking party and the validating one. Most exchanges ask for a commission in exchange for staking services. Bear in mind: when you use an exchange, you don’t actually hold the keys to your cryptocurrency. You’re trusting the exchange to do that on your behalf. This creates a level of risk that not all stakers will be comfortable with.
Wallets / Staking Pools
A staking pool consists of many different investors. They get together and pool their stakes (self-explanatory). This requires a little bit of coordination and expertise. This is why many staking pools are private organizations with high entry barriers. This prevents the pool from being more trouble than it’s worth.
Staking as a Service (SaaS) is a way to avoid many potential pitfalls associated with staking. They do this by entrusting the task to a staking service provider. Their job is to uncover and make sensible investments on behalf of the stakeholders. Services of this kind remove some of the complexity from the staking process. However, they create a centralized system, with large organizations having inordinate power. This dampens many of the philosophical advantages inherent in crypto.
Making a stake gives the stakeholder voting rights on how a given coin is governed. SaaS providers might end up voting differently, which creates a conflict of interest. So, not all things sacrificed for the sake of convenience might be easy to spot.
Decentralised Finance is the opposite side of the philosophical coin. DeFi allows you to make a stake using something called a ‘smart contract’ — which is basically a piece of software that executes when certain preconditions have been met. DeFi uses a given blockchain to facilitate the trade of many kinds of financial product.
DeFi staking provides a passive income to investors without asking them to collaborate with organisations whose motives are opaque, and which might be corrupt to some extent. DeFi staking tends to be cheaper, too, since there are no middlemen to worry about.
Choosing the right Staking Platform
Staking platforms should be chosen based largely on their trustworthiness and reputation. If you don’t do your homework, you can expect to be stung.
Naturally, it's also worth considering the fees you’ll be paying to the staking platform. Fortunately, there are many platforms competing for your money, which helps to drive down the price of making a stake.
There’s risk inherent in any decision you make when it comes to investing in crypto, and staking is no different. Do your research thoroughly before choosing a platform, and make sure that you analyse your options rather than simply going with your gut.
Staking Platform Overview
|Binance||Exchange, DeFi||No fees||5 DeFi, 77 Locked Staking Offerings|
|Bitpanda||Exchange||No fees||10 coins incl. ADA, TRX, SOL, DOT, ATOM, NEAR, GRT|
|Coinbase||Exchange||25%||ETH, ADA, ATOM, XTZ, ALGO, DAI, more|
|CEX.io||Exchange||No fees||AVAX, ADA, ATOM, DOT, SOL, XTZ, more|
|eToro||Exchange||10%-25%||ETH, ADA, TRX|
|Kraken||Exchange||No fees||BTC, ETH2, ADA, DOT, SOL, ATOM, XTZ, more|
|LiteBit||Exchange||No fees||4 coins incl. ADA, BNB, MATIC, RDD|
|Uphold||Exchange||No fees||ETH, DOT, ADA, SOL, ATOM, XTZ, KSM, KAVA|
|MyCointainer||SaaS||7,90€/month + 1%-2%||81 coins incl. ETH2, ADA, DOT, SOL|
|Figment||SaaS||up to 12%||34 coins incl. ETH2, ADA, DOT, SOL|
|Staked.us||SaaS, DeFi||10%||32 coins incl. ETH2, ADA, DOT, SOL|
|Lido||DeFi||10%||ETH2 and SOL|
Let’s run through a few of the major players when it comes to staking. The well-known exchanges tend to support the staking of multiple PoS cryptocurrencies.
On Binance, this works through two different methods. There’s ‘locked staking’, which will simply stake your coins for a fixed period, after which you’ll get it back. Then there’s a DeFi staking option for a limited number of currencies (though this is actually performed by an outside organisation, and not by Binance itself).
Coinbase is another big exchange. To stake on this platform, you simply move the funds you’d like to stake into the ‘vault’. If you’re staking a certain kind of coin, this might mean locking them in for a fixed period — though this isn’t always the case. The staking fees are pretty steep, but the platform is intuitive and secure.
Kraken is somewhat distinctive, in that it allows something called ‘off-chain’ staking. This basically means that you’re simulating the rewards you’d get from a real ‘on-chain’ stake. It’s available only to certain customers, with most limitations coming as a result of where you are in the world. Off-chain staking isn’t just limited to proof-of-stake crypto, since you’re not really using the blockchain to make the stake. You can therefore stake Bitcoin, and even fiat currencies like the dollar or euro.
eToro offers staking for Ethereum 2, Cardano and Tron, with plans in the pipeline for other PoS currencies like NEO, Tezos and EOS. It’s simple to use — as is the case with Cardano and Tron, you only need to keep the coin on the platform in order to stake it. You’ll get a superior APY depending on your level of membership, with those in the ‘Diamond’ Club keeping 90% of their yield. Cardano (ADA) and Tron (TRX) are limited for US users.
If you’re interested in DeFi then you might stake directly through the Lido platform, which works by exchanging your cryptocurrency for a staked equivalent coin.
If you’d like to stake directly from your hardware wallet, then the Nano X or S from Ledger is a popular choice. You’ll be able to gain rewards by staking directly through the app, while keeping your investment secure. Ledger’s marketing suggests that you’ll be able to achieve complete financial freedom through the product using a combination of staking and lending — while this is certainly possible, it’s by no means guaranteed.
When it comes to staking as a service, the market is a little bit younger, and you might find yourself looking to lesser-known providers like MyCointainer, Staked and Figment Networks.
Estonia-based MyCointainer offers a range of attractive features, including the ability to track multiple stakes in multiple coins at the same time. It comes with a built-in exchange, so you’ll be able to get your fiat currency exchanged and staked via a single point of contact.
Over in New York, Stake.us provides support for a smaller number of coins (just 30 or so against MyContainer’s more than 100). Staked.Us also supports DeFi lending of digital assets.
Figment Networks is based in Canada. It offers a still more limited number of protocols, but it’s backed by a couple of influential blockchain-specialised venture firms. With a well-established and experienced team behind it, this is a platform that’s worth paying attention to in future.
How to stake crypto
The actual process of staking your crypto will vary depending on the currency you’re working with, and the method you’re using. Let’s run through a few of your options.
Stake on a Crypto Exchange
Having chosen a crypto exchange, you’ll typically find a list of all of the currencies you have available. We’ll take Kraken as an example, but the basic layout will be similar in most exchanges. Find the currency you’d like to stake, and make sure that you have the coins available in your wallet. If you can navigate Paypal, or your bank’s website, then you should have little trouble.
Stake on a Crypto Wallet
Staking directly through a wallet requires a little bit more expertise, but that doesn’t mean that it’s beyond the reach of a casual investor. You’ll need access to a wallet that supports staking. Simply download the wallet in question and follow the instructions. This is the case with hardware wallets like Ledger, too — you can stake from within the app.
Stake using a Staking-as-a-Service Platform
To start earning through an SaaS platform, you’ll need to set up an account at the relevant platform, and then either buy new coins or deposit your own. Your profits are generated at regular intervals. In most cases, you’ll see your annual earnings listed alongside the supported currency. Services like this are designed to make things simple, so you can stake multiple coins through a single platform.
Stake using a DeFi Staking Platform
If you’re staking using a DeFi platform then you’ll be lending your coins over to the platform. They will then use the coins to invest in projects via decentralized finance. In the case of Binance, you’ll be presented with a choice between flexible staking and locked staking. The former will earn you a slightly lower APY, but it does mean that you’ll be able to withdraw your stake at any time.
With Lido, you’ll be able to connect your wallet to the DeFi platform in exchange for a set reward fee, at a fixed transaction cost. Here your currency will be exchanged for a staked equivalent (such as ETH for stETH). You’ll get the rewards in real-time, without the risk of downside.
The staking process has a lot to offer for both those involved in the world of crypto and those outside of it. Stakers can earn interest, increase the value of their coins, and give back to the community. They may also enjoy faster transaction speed. Staking is also better for the environment which is a big deal these days. In other words, staking is profitable, efficient, and not so complicated. Sounds good, right?
Crypto staking is a process used to verify cryptocurrency transactions. It also allows participants to earn passive income on their holdings. You can earn anywhere between 5 to 20 percent per annum on the amount of cryptos you stake.
Pros of Staking Crypto:
• Earn interest
• Faster, cheaper transactions
• More energy efficient
• Potential voting rights
Cons of Staking Crypto:
• May be locked into a fixed-term
• Risk of slashing penalties
• May incur fees