How to Stake Crypto – Quick Guide

Crypto staking is the process of locking your coins on a platform and earning interest on it over time.

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How to Stake Crypto – Quick Guide

What is Crypto Staking?

Crypto staking is the process of locking your coins on a platform and earning interest on it over time.

Staking is the central premise of the fledgling proof of stake (PoS) technology, which many blockchains are now adopting. With PoS, participants lock (or “stake”) their coins on a protocol. Stakers are regarded as validators on the blockchain.

Your annual percentage yield (APY) will be proportional to the amount of money you have in the staking pool – the more coins you stake, the more you earn.

Staking crypto has grown in popularity, with many projects seeing high returns and online guides on how to stake crypto appearing in mainstream financial publications.

The Ethereum 2.0 staking contract is currently the single largest holder of ETH tokens, with over 7.16M Ether tokens valued at $21.7 billion, at press time.

In this crypto staking guide we’ll review some of the best crypto staking platforms to earn crypto passive income on.

Compare Crypto Staking Platforms

1. Binance

Binance is the world’s leading cryptocurrency exchange, with billions in assets being traded daily. Binance offers exposure to some of the largest crypto assets like Bitcoin, Ethereum, and several others. It also provides crypto staking services.

Using its ‘Binance Earn’ crypto staking service, Binance allows you to earn interest on the staking coins you have in your wallet. The service has three staking options, namely locked staking, DeFi staking, and ETH 2.0 staking.

Locked staking allows you to hold your coins for a pre-fixed period, between a week to three months. Funds are stored in your wallet, and you can withdraw whenever you want – although at a cost.

Binance’s DeFi staking is focused on DeFi projects. Although they are considered the best coins to stake in terms of generating higher yields than locked staking, they are inherently riskier. ETH 2.0 Staking is the third option. ETH 2.0 allows you to earn staking rewards by supporting the Ethereum 2.0 network from your Binance wallet.

Binance doesn’t charge staking fees when you use Binance Earn. But that might change soon. You can stake 69 assets on the exchange, as well as five flexible DeFi staking assets. These include Filecoin (FIL), Shiba Inu (SHIB), AOL, Kusama (KSM), and the Binance Coin (BNB).

Your staking reward will vary on Binance, based on the asset staked, staking coins amount, and lock-up period.

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2. Coinbase

Coinbase is a US-based and leading exchange that emerged in 2021. The crypto platform provides crypto trading services and staking services across different PoS pools.

To enjoy the staking service on Coinbase, users have to verify their identity with a valid TIN and reside in a location where staking is allowed.

Coinbase allows users to stake on the following assets: DAI, USDC, Cosmos (ATOM), Tezos (XTZ), Algorand (ALGO) and largest altcoin Ethereum with an APR of 5%. Coinbase launched the pool for Eth2.0 staking in April 2021.

Unlike Binance, the pools available for staking on Coinbase are limited. Coinbase charges a commission for staking tokens on behalf of its users.

Additionally, because Coinbase is US-based, US users are taxed on staking rewards as long as they are above $600, as provided by the 1099-MISC tax policy.

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Best Coins to Stake

Currently, there are thousands of staking pools distributed across various platforms. DeFi enthusiasts look out for pools with either high annual percentage returns (APR) or annual percentage yields (APY). Additionally, they try to stake assets with good fundamentals and room to grow in market valuation.

Below is a list of some of the best coins to stake and the crypto staking rewards they can yield.

Ethereum

Ethereum (ETH) has remained the second-biggest cryptocurrency behind Bitcoin and the largest altcoin in the history of digital currencies. Since Ethereum is switching to Proof-of-Stake consensus- also known as Ethereum 2.0– from the PoW model come 2022, Ether the native token has become a stakeable asset.

This is currently one of the highest-ranking assets to stake in decentralized finance. Beyond this, it will be beneficial to be one of the early validators for ETH 2.0.

The Ether staking pool which can be found on Eth2 LaunchPad is offering an annual yield rate of 6.8% to users. Those who participate can make crypto passive income before the transition to the PoS model is complete.

Ethereum’s rival, Bitcoin cannot be staked because its blockchain still runs on the proof-of-work consensus which takes into account