Today, there are an increasing number of simple options to stake crypto and some of the world’s most popular exchanges allow you to access staking right from their platform.
In this article, we will take a look at:
If you’re unfamiliar with staking and wish to learn more, why not check out the following Learn Crypto articles?
Staking crypto to earn a passive income used to be a tricky affair in the past, with technical navigation and crypto wallet complexity providing newcomers with significant technological barriers to access.
Users would need to know how to connect their wallets and computers to the blockchain network, and then manually activate smart contracts that would lock up their crypto assets for a period of time to contribute to the security of the blockchain, while also helping to validate transactions submitted to the network.
Much of these processes involved probability. It was never guaranteed whether or not you would get chosen to validate transactions, thereby earning the rewards. This made earning by staking not only a complicated process but an unpredictable one.
The creation of staking pools (more details covered in this article on “What is Staking?”) made staking crypto a much easier process, with more convenient participation and more predictable rewards. Read on to see how crypto exchanges or crypto staking platforms have used this convenience to offer their existing users the chance to stake with them.
Companies and large crypto holders have also created even more convenient options for mainstream users to engage in crypto staking, some creating their own pools to help users stake in a few clicks. Individual users are said to participate in these staking pools, allowing the pool operators or validators to own a larger stake in the network and thus, gain more probability to earn staking rewards.
In return for doing all of the technical work required to actually stake the crypto and validate transactions, they levy a small charge on participants in the form of fees and commissions.
Crypto exchanges, which are platforms that people use to trade or buy and sell crypto, have been quick to introduce crypto staking directly from their site. Between them, the biggest crypto exchanges have millions of users who already own digital assets stored on these exchanges.
They offer these users the option to lock away their tokens and coins at the exchange, who then go on to stake the assets on their users’ behalf. Any rewards earned by the exchange from staking are then distributed to their staking users.
For the user, this is a quick and hassle-free way to indirectly stake crypto to earn passive income from staking rewards.
This article examines some of the most popular crypto exchanges where you can do convenient crypto staking. It will give you an overall view of each exchange’s advantages and disadvantages.
Binance is one of the largest and most well-known crypto exchanges in the world, thanks largely in part to its global presence without an actual physical headquarters. Its focus on making the platform available to most countries also makes it one of the most accessible.
One of the advantages of Binance compared to most rivals is the sheer variety of projects and coins covered under its Staking options. As of the time of writing (May 2022), there are some 100 different staking coins with a diverse range of sectors and Annual Percentage Yield (APYs), which is the rough estimate of how much you’ll earn in a year of uninterrupted staking.
Binance also offers the users the chance to “lock up” their tokens in varying periods, from as few as 10 days, to as many as 90 days. The thing to watch out here is that longer periods don’t necessarily result in higher gains. For example, Solana (SOL) staking currently offers a higher APY for 90 days (13.47%) than for 30 days (9.28%). On the other hand, if choosing to stake Shiba Inu (SHIB), you gain much higher APY on a 10-day lock-up period (10.12%) than when choosing a 30-day lock-up period (0.52%).
The longer the lock-up period, the higher the minimum amount of crypto tokens you need to commit. For example, only 200 SHIB is needed to stake for 10 days, but 1 million SHIB is needed for 30 days.
It is unclear what contributes to the significant variance, though it appears to be that more established coins like SOL will grant higher APYs for longer lock ups.
Rates to change daily but Binance also offers promotional APYs from time to time, though these tend to be limited to smaller amounts at short lock-up periods. Each staking pool also has a maximum allocation and the promotional offers can vanish soon after release.
Significantly, Binance offers Ethereum (ETH) staking for 10.12%, possibly the highest among rivals. Because ETH is an established crypto and is the largest staking network possible, this makes it an excellent choice for small ETH holders to earn large staking rewards.
On the other hand, Binance does seem to have a reputation for poor customer support response times, so if you feel you might require assistance from the platform, be prepared to wait.
Pro: Over 10% APY on ETH staking.
Con: Possibly long waiting times with customer support.
Bitstamp is perhaps the most established crypto exchange on this list that supports taking. Founded in 2011, it is one of the original crypto exchanges still operating today. It is seen to be a favourite for veteran crypto professionals and financial institutions due to its experience and expertise.
Because of this clientele, Bitstamp has a clean dashboard with a glossy, professional feel, and can be useful for users who would like a professional trading app to go along with their staking needs.
This institutional-level feel extends to its security. Bitstamp claims to store 98% of its crypto funds on cold wallet storage, that is, on offline wallets that are not connected to the Internet and, therefore, safe from hacking attempts.
Perhaps as a consequence of cold staking (staking from cold wallets), Bitstamp only offers two crypto for staking at the moment, with a flat rate of 4.82% APY on Ethereum (ETH) and 5% APY on Algorand (ALGO). Staking is completely flexible here as there are no lock-in periods, so the rates are clear, with a reasonable minimum amount (0.1 ETH or roughly $200).
While this lower APY and narrow choice for staking does appear to be a con, stakers on Bitstamp benefit from the safety and assurance provided from cold staking, as well as a licensed Luxembourg exchange.
Pro: Highly professional exchange with 98% of assets in cold storage.
Con: Only 2 coins can be staked.
Binance and Bitstamp, mentioned above, may take the plaudits for being the most accessible and the oldest, respectively. On the other hand, crypto exchange Coinbase does get a lot of visibility in the news in North America as a NASDAQ-listed company. More recently in the United Kingdom, as it has also been one of the long-time holders of trading licenses with a relationship with regulators that’s as close as it gets for a crypto company.
It is one of the few regulated exchanges with a foothold both in the US and in the UK, and happens to be the only exchange in this list to be a Visa principal member. This means that they issue a Visa-branded credit/debit card directly, unlike many other crypto companies that issue the same via a third party. Principal membership is viewed to be highly exclusive and suggests that Coinbase, as a company, passes rigorous regulatory due diligence.
As for the staking platform itself, it offers just a few more digital currencies than Bitstamp: Ethereum (ETH), Algorand (ALGO), Cosmos (ATOM), Tezos (XTZ), Dai, and USDC. USDC is a stablecoin managed and operated by Circle, the umbrella company that operates Coinbase, so USDC staking at the source could be a good idea. Coinbase also allows you to stake from your own external wallet, should you choose to do so, providing a higher level of security than others (as opposed to giving them direct ownership of your funds).
Coinbase fees are notable for being among the highest in the industry (for buying, exchanging and withdrawal), however, and may put off first-time crypto buyers.
Pro: Highly regulated exchange with crypto card.
Con: Costly fees, greater variance in APYs.
Crypto.com started life out as a crypto card project in 2016 but after years of delays rebranded as a crypto exchange, onboarding millions of investors in its original Monaco card project.
Today, it thrives on offering discounted buys of crypto for its members. Members who participate in limited time offers can buy its own native CRO tokens to also buy more established digital assets like Bitcoin and Ethereum at good prices.
Crypto.com makes this list because its type of staking actually differs from actual staking, as explained in the following paragraph.
Crypto.com offers staking via its Crypto Earn facility, which also branches out into other financial services like loans and even NFT markets. This is the main difference in their staking options, as they actually don’t stake your coins into staking pools. Instead, your deposited funds are allocated as loan capital to other users. Stakers earn interest from these loan repayments, which is paid out daily to stakers.
As such, the APYs will appear to be higher than actual staking. Stablecoin APYs are double that of rivals, for example, USDC and TrueGBP offer 12% APY, while Bitcoin and Ethereum are 6.5%. Hold enough of its native CRO tokens and you can earn even higher APYs.
Unlike other rivals, though, Crypto.com is not very user-friendly, with far less educational content about their offerings. As such, it may be difficult for a newcomer to navigate around the website and features.
It also does not appear to be as globally compliant as others when it comes to regulatory licences, owning a Class 3 Virtual Financial Assets (VFA) License from the Malta Financial Services Authority (MFSA) and Australian Financial Service License.
Pro: Higher than usual APYs.
Con: Can be difficult to navigate and learn for new users, weaker global regulatory status.
eToro is the oldest among the options listed here as it actually started life out as a digital broker that today includes cryptocurrency markets. Because of its experience in traditional markets, it has a large user base of traders active in stocks, commodities and forex.
As a cryptocurrency broker, eToro also allows for crypto staking from the same platform, focusing on three digital assets: Ethereum (ETH), Cardano (ADA) and Tron (TRX).
Staking rewards here are based on a distribution share instead of APYs. Bronze members and US clients will receive 75% of staking rewards from eToro, while Diamond members and above will receive 90% of any rewards from staking. Rewards are only calculated after a certain staking period (starting from the 8th day for TRX, 10th day for ADA, and variable for ETH, but you can unstake your digital assets any time – forfeiting rewards if you don’t make the minimum staking period.
Fees on eToro are competitive and long-time regulation from the SEC makes it a reputable option for US citizens, but it also has FCA and ASIC licences.
Pro: A well established and regulated player.
Con: Can be difficult to predict staking returns.
When choosing a crypto staking platform, it is important to understand what your needs are as a user. Obviously, the amount of yield you can earn from staking will be an important part of the overall selection criteria but there are other factors to consider as well.
For example, all of the sites covered in this article make it easy for you to participate in crypto staking without the need for technical knowledge to stake your own funds directly. All the other crypto staking platforms also provide this same convenience. However, Coinbase also offers the option for you to participate in their staking pool directly from an external wallet. This keeps you in control of your funds, which is an important aspect of cryptocurrency ownership for many who believe that “Not your keys, not your crypto”.
You can learn more about cryptocurrency ownership in this Learn Crypto article about the concept of crypto custody and why it’s important in crypto.
The factors covered in this article to differentiate the different crypto exchanges in terms of their staking options cover the staking yields, payout frequencies, lock-up terms, and the number of supported tokens. Another thing to think about is the security of your funds – from the perspective of whether or not the platform has a regulatory license. This is because a licensed exchange presumes that they have enough asset security and protection measures in place to keep investor funds safe.
In summary, you should always consider these key factors when choosing the best crypto staking platform to stake crypto on your behalf:
Passive income returns are quite straightforward. The higher, the more profitable. But be wary if the APY offered is much higher than others. Try and find out why they pay more. Do they take riskier approaches? Perhaps the platform is not regulated?
Staking requires locking in your crypto assets for a certain period of time. This is usually referred to as the lock-up period. In the event of an emergency, you will appreciate being able to retrieve your tokens at any time.
If you require more flexible staking, you might prefer a site that allows you to unstake at any time, or to cancel the lock-up period when needed.
Naturally, you might want to stake in several tokens to spread out your risk or simply to diversify your portfolio. You may even want to trade or exchange tokens to have different tokens to ensure you have the best crypto to stake. Some platforms only focus on a handful of tokens so you might end up staking on a platform with multiple options.
On the other hand, it is generally riskier to stake on new projects or unproven crypto. Coins like Ethereum are seen as safer as they are more decentralised, making them far less vulnerable to hacking or failure than cryptocurrencies that don’t have a strong network of validators securing them.
A regulated crypto exchange means that it meets the requirements for the security and business measures required by the particular license it holds.
In general, licenses from larger and more established jurisdictions are more difficult to obtain, indicating a higher level of regulatory compliance for sites that hold them. So a site holding a US, UK or EU license suggests it is more secure than one holding an offshore license.
Of course, no license guarantees safety of funds, so you should always look for other measures in place such as deposit guarantees or cold wallet storage.
A site that has been in business for years is likely to have more experience with crypto and has spent years building up a reputation, either in security, reliability or even customer support.
Be careful not to stake at newer sites promising incredible staking rewards or you might end up losing your money in a fly-by-night scam.
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