Lately, Proof of Stake (PoS) has been in the crypto world’s public eye. And as the trend tends to lean toward staking, we can’t help but look for the best coins to stake so we can earn rewards by hodling.
It’s hard to decide which are the best coins to stake, though. One important thing is the staking rewards offered, but that’s not everything when talking about staking.
So, let’s see how you can pick the best staking cryptos.
What Is Staking in Simpler Words?
The definition and terminology might vary from project to project. Yet, generally speaking, staking is the process within the Proof of Stake consensus mechanism in which a node is appointed to validate the next block. Hence, the chosen nodes are called validators.
Staking cryptos & validators
To become a validator, a node has to deposit a certain number of coins into the network as a stake. In a way, it is similar to a security deposit.
The size of the stake affects a node’s chance to validate the next block. The bigger the stake, the more chances someone has to be chosen as a validator.
Once chosen, the validator checks if the transactions are valid. If there are no issues, the new block is added to the blockchain.
Afterward, the validator receives a part of the fees associated with the transactions. Think of it as a passive income for the validator, where he earns rewards from the transaction fees.
When a node wants to stop being a validator, the ‘staker,’ a.k.a the user, can simply pull out the coins together with the transaction fees.
Staking tokens help secure the network and offer an annual percentage yield for the validator and the ‘stakers’ that decide to stake crypto. Staked assets have a certain period when they are ‘locked’ – when neither you nor the validator cannot sell them.
What If some Lousy Party Decides to Mess with the Validation Process?
If a validator does not do their job correctly, they will lose a part of his stake or even all of it.
So, validators can lose a lot more money than they can gain if they misbehave. This means that they can lose their staking rewards & possibly a part of their coins – it depends on the crypto assets staked.
Moreover, users can’t unlock their stake straight away as the network first needs to check if a validator should be punished.
Yet, although it seems to be a more efficient and eco-friendly system than Proof of Work and crypto mining, Proof of Stake is a less proven method, and there are quite a few concerns with it. One of them is that the whales are at an obvious advantage.
So, different cryptocurrency networks came up with additional protocols and variations of the PoS.
Delegated Proof of Stake
The coin age selection and Delegated Proof of Stake (DPoS) are some of the most known.
In coin age selection, the number of coins being staked is multiplied by the length of time they have been held for. After validating a block, the coin age is reset to zero, and the validator has to wait a certain period before he can be chosen again.
The DPoS system is maintained through an election process that mainly requires holders to vote for delegates. Delegates are responsible for validating new blocks.
The number of delegates may vary from one network to another. Some networks have a fixed number of delegates that can range between 21 and 101, while others may have an indefinite number.
Each cryptocurrency holder in the network gets several votes that they can use themselves or delegate their stake to another stakeholder on the network to vote on their behalf.
As blocks are produced every few seconds, delegates that attempt to mess with the blockchain’s integrity or fail to make blocks constantly will lose their reputation and be expelled and replaced by another delegate.
What we Considered before Picking a coin to stake
There are several factors that need to be understood when you’re talking about staking coins or tokens.
Staking crypto is not as passive as it may seem. In some cases, you might need to claim the rewards and re-stake the winnings.
So, when staking crypto, are you looking only to earn rewards, or there’s something else?
Are there other things that matter besides the annual yield?
Coin Potential
The hardest thing is the unbiased evaluation of the cryptocurrency potential. In the thrill of the moment, we tend to overvalue certain aspects.
So a cryptocurrency with a low chance of growing in the future might seem amazing to us.
Overall, the most valuable cryptocurrencies are those that have the highest potential of getting adopted for mass use, which would drive their price up in time.
But nothing is guaranteed, and the best staking opportunity of 4 years ago (Bitconnect) is today’s most known scam.
So if you want to find the real potential of a cryptocurrency, you’d have to do in-depth research about it, about the team behind it, the tokenomics, and the community behind it.
Coin Liquidity
Liquidity in cryptocurrency refers to the ease of changing a cryptocurrency’s coins for other crypto coins or fiat cash. Crypto coins with low liquidity can turn out to be dead investments.
Ideally, the most valuable cryptocurrencies have the highest liquidity rates because many people are willing to acquire them using fiat cash or other equally valuable cryptocurrencies.
Cryptocurrency staking doesn’t necessarily need a certain liquidity, but if you want to cash out your staking coins at any time – it helps to have high liquidity.
Staking coins with low liquidity is not a good idea, as it would be hard to sell the cryptocurrency in case of some bad news.
Trading Volume
Volume is another important metric when staking coins. It refers to the total units of the cryptocurrency sold within a particular period, usually one day, week, month, or year.
Besides indicating a cryptocurrency’s popularity, it can help you assess how much you can take out of the market without plummeting the price. Ideally, the safest digital tokens to stake are those with high trading volumes.
And although historical performance cannot be taken as a guarantee for future performance, it’s best to watch a few trading indicators to know what to expect from a cryptocurrency’s trading volume.
A high trading volume doesn’t make a top-staking coin, but it helps. It means there’s demand, and people buy and sell it.
Staking Options
There are three ways to stake cryptocurrencies: using a crypto exchange, joining a staking pool, or becoming a validator. Some of these options are easier than others, while others are more complicated but offer more opportunities.
For example, staking as a validator unlocks more opportunities than using a crypto exchange platform, but it is expensive and can be complicated. It is important to choose a cryptocurrency that accepts your preferred staking option.
Also, keep in mind that some cryptocurrencies, such as Tezos, come up with non-custodial delegation models, where you attribute your stake to an existing node, but the node owner cannot access your funds.
The team
The team matters a lot, even if we’re talking about crypto staking or building a business. Without a proper good team, there’s a high chance that the project will fail.
You should look for a team that delivers and is ready to deliver once again. Don’t believe in super staking pools with 1000% APR and other scams; focus on finding a team that has:
- Experienced management – People that worked for Top 500 companies in management positions or people that previously had a startup that they sold;
- Finance employees – To create a good crypto staking system that will incentivize the early users and also drive long-term growth;
- Active with community – An active team that speaks and listens to the community’s advice is the best thing a crypto project can have.
Top 10 Proof of Stake Coins – Earn Interest Staking Crypto
In this part, we’ve picked the safest cryptocurrency to stake rather than the ones with the highest staking rewards. If a cryptocurrency has a staking program where you can earn interest of two figures monthly, that’s pretty much a risky one.
So here, we’ve picked pretty much the safest coins to stake, mostly by checking their market cap, their staking reward, and how easy it is to convert the cryptocurrency to fiat money.
Ethereum (ETH)
Ethereum is one of the most popular cryptocurrencies on the market, and it switched from Proof of Work (PoW) to Proof of Stake (PoS).
The change is called The Merge, and it helped Ethereum become a promising option for staking.
Simply put, Ethereum is a decentralized software platform basing its activity on blockchain technology.
You can create smart contracts, which are essential for decentralized applications to function well. Did Ethereum make this change to become one of the best crypto-staking coins? Probably not.
Ethereum is a decentralized blockchain widely used by developers for creating technology based upon it, and it is used in a wide range of industries.
Crypto Investors picked ETH as one of the best staking coins due to its past performance & the plan to lower inflation using PoS.
Ethereum staking rewards change based on how much of the cryptocurrency is staked. Thus, the more ETH is staked, the lower the rewards will be.
Ethereum staking rewards don’t have fixed lock-up periods, as right now, you cannot unstake the Ethereum delegated until the Shanghai upgrade – which will take place in 2023.
Ethereum has an annual percentage yield of ~3.95% – but it’s among the best staking options as it’s a used cryptocurrency with a high market cap.
When we talk about the annual percentage yield, there are better coins to stake, but Ethereum is a top-staking coin nonetheless.
The staking ratio of Ethereum is sitting at 13%, as the change to PoS happened quite recently. The energy usage issues involved disappeared, however.
CARDANO (ADA)
The second among our best staking coins on our list is Cardano. The yield could be better, but the staking coins and holding combo was a good deal for Cardano fans.
In Cardano, staking involves a proof-of-stake algorithm known as Ouroboros. It divides up time into “epochs” that contain 21,600 slots. Slots are short periods in which a block can be created, and they last around 20 seconds.
And as it seems, staking Cardano comes with a 3.3% average yearly return. (More details here). The best thing? The staking ratio of Cardano is an amazing 72%.
Cardano is one of the oldest proof-of-stake cryptocurrencies, and its coin holders consider it one of the best digital assets out there.
Cardano is not the best staking coin from the annual yield perspective – but it’s a good option for diversification.
Avalanche (AVAX)
Avalanche is a blockchain platform that can process around 4,500 transactions per second (tps), which is significantly more than Ethereum, which stands at around 14 tps. Its native cryptocurrency is called AVAX, and it was launched in 2020.
Avalanche was developed to be a fast, secure, affordable, and accessible open-source project, and it also has a smart contract platform.
AVAX was built to pay transaction processing fees, secure the network, and act as a basic unit of account among Avalanche-based blockchains.
The AVAX blockchain’s main advantage is having almost instant transactions and a higher rewards rate.
There are two types of participants in the Avalanche staking process: validators and delegators.
While validators secure Avalanche, process transactions, and create new blocks, delegators are those who hold tokens and want to participate in staking but choose to do that through an existing validating node. The process is called “delegation.”
The yearly staking rewards for delegators and validators are quite close, standing at 8.67% and 8.97%, respectively. This makes AVAX one of the best coins to stake for a decent passive income.
So, if you want to stake AVAX as a delegator, you will have a yearly reward of $86.7 for $1000 worth of AVAX staked. On the other hand, if you stake the same amount as a validator, your yearly staking reward will be $89.7, but you’ll have server costs.
62.51% is the staking ratio for AVAX. 62.52% of AVAX is locked and generating passive income for its token holders. AVAX also has its own staking platform – basically a place where you can pick from different validators to secure the network.
Polkadot (DOT)
Polkadot was founded by Dr. Gavin Wood, Robert Habermeier, and Peter Czaban within the Web3 Foundation.
The goal is to build an ecosystem where different projects can build their projects upon and rely on its security instead of building from the ground up.
The network connects blockchains through a system involving a Relay chain, several shards called parachains, and bridges.
As for the governance system, Polkadot employs a referendum-like method called Referenda. The voting system aims to engage a large part of the community by granting DOT holders voting rights based on their stake.
To become a voter, a DOT holder must lock their coins up for at least the enactment delay period beyond the end of the referendum. There is also the possibility to vote without locking, but the vote’s value is drastically reduced.
Polkadot’s consensus system has a staking consensus protocol at the base. But besides becoming a validator with a 24/7 active node, the staking also engages a system of nominators.
It is among the best staking coins due to its adoption, yield rate, the team behind it, and technology.
Polkadot has one of the highest annualized yields, around 14%. This puts dot among the best staking coins to earn rewards.
DOT’s market cap is over $6 billion at the time of writing, and it provides one of the best staking rewards when compared to other digital assets in top 20.
The DOT’s staking ratio is 45.45%, making it a good staking option for crypto enthusiasts.
Polygon (MATIC)
Founded in 2017, Polygon is a stack of protocols developed to contribute to increasing Ethereum’s scalability. Polygon acts like a Layer 2 protocol, in order to improve transaction speed and lower costs for developers on the Ethereum blockchain.
To better understand what Polygon is capable of, think of the fact that Ethereum can achieve around 18 tps, while Polygon can go as high as 7,000 tps.
MATIC is used to govern and secure the Polygon network, as well as for paying network transaction fees.
Polygon staking basically implies delegating cryptocurrency to validators who run nodes on the Polygon network. Users who want to enter the staking process have two options:
- Become a delegator – delegators receive other users’ MATIC and help the network conduct PoS validation.
- Become a validator – those who become validators run a full node to validate transactions. Their rewards consist of newly created MATIC and a cut of the fees.
MATIC can be staked to earn passive income and secure the network. You can use a crypto platform such as Binance, Kucoin, Crypto.com or deposit funds into the Polygon network staking platform.
You can earn up to 4.57% APY by staking MATIC. While the staking rewards are a bit low, Polygon has one of the most easy to use staking platforms, a high market cap of over $8 Billion, and over 39% of its circulating supply in staked coins.
Cosmos (ATOM)
ATOM is one of the best staking coins there are. ATOM is a Proof of Stake cryptocurrency designed to fuel an ecosystem of blockchains that interoperate with each other.
Its Cosmos SDK allows developers to create a secure blockchain interoperable with ATOM and all networks.
Is ATOM the best staking coin? Probably not, but it’s sure one of the top staking coins that you can pick. Staking ATOM is pretty easy, even if you use a decentralized wallet or do it via a crypto exchange such as Binance or Crypto.com.
The staking ratio of ATOM is 62%, pretty high for a $3.8 billion market cap cryptocurrency. Staking ATOM has an APR of 23%, making ATOM one of the best crypto staking coins out there.
Band Protocol (BAND)
Band Protocol is a software developed to provide real-world data to dApps (decentralized applications) to a network of incentivized users.
Often described as a “decentralized oracle”, Band Protocol runs on the Ethereum blockchain and executes smart contracts through a software that incentivizes some specific users (called validators) to provide and verify external data. The native cryptocurrency of the Band Protocol is called BAND.
Same as DOT, BAND has high crypto staking rewards, with more than 11% yearly yield. The market cap of BAND is around $200 million at the time of writing, with over 70% of the BAND in circulation being staked tokens.
Unlike MATIC, AVAX, ETH, or ADA – BAND has a much lower market cap that makes it a bit riskier. But on the other side, you can earn staking rewards and profit from its possible token growth.
Staking BAND for 1 year at an 11% APY could be quite profitable if BAND reaches its top value in USD coin again.
But it’s risky as the markets fluctuate, and there’s no particular crypto that it’s not affected (except certain stablecoins).
Synthetix Network Token (SNX)
DeFi was a hot topic for 2022, and so was Synthetix.
Synthetix is a derivatives liquidity protocol that was built on the Ethereum protocol. The platform allows users to issue and trade synthetic representations of real-world assets as ERC 20 tokens.
The synthetic asset (Synth) tracks the price of an external asset at a 1:1 ratio. It can represent the price of Bitcoin, the price of gold, and even the price of Tesla stock.
Also, Synthetix allows the creation of tokens that track the inverse evolution of an asset called Inverse Synth (iSynth).
SNX serves as the collateral for the Synths minted on Synthetix. The SNX staking pool allows the platform to back the Synths with liquidity, so users can redeem their assets at their counterpart’s value.
As staking is based on a system of backing Synths, the platform implemented a strategy where SNX stakers need to manage their collateralization ratio to be above 400% to collect weekly rewards.
Although Synthetix’s staking can feel quite peculiar due to the collateralization ratio and the debt system, it’s a really interesting system for advanced users, and it’s one of the most interesting crypto staking coins out there.
For normal users like you and me, you can stake SNX for 10% APR on Binance.
Similar to BAND, SNX has a lower market cap and decent staking rewards, and you can earn passive income by staking tokens and the price increase in USD coin. But it’s risky, don’t forget that.
Injective (INJ)
Injective Protocol is a DEX (Decentralized Exchange) that provides advanced services, including cross-chain, Forex, margin trading, and synthetics.
The project was developed to be a decentralized and permissionless exchange with no gas fees.
Injective Protocol’s main goal is to render access to DeFi (decentralized finance) markets, eliminate gas fees while also providing high transaction speed, and offer a complete trading experience to each user.
INJ is an ERC-20 utility token and is the native cryptocurrency of the Injective Protocol.
INJ has the lowest market cap of all the cryptocurrencies mentioned until now.
An interesting fact is that the staking ratio of ING is 55%, so large token holders percentage are staking INJ to generate passive income.
INJ has a 14.72% APY at the time of writing; staking it can be done on Injective Hub or on Binance for 5.9% APR, if you’re a fan of staking on crypto exchanges.
CRO
Cronos is poised to fuel the growth of the metaverse – it is the only cryptocurrency that interoperates with the Cosmos and Ethereum systems. It also supports NFTs and DeFis.
With CRO, you can order a premium Crypto.com card, which used to generate a nice monthly staking yield in the past. Currently, the cards are not what they used to be – but the platform grows on the DeFi & Metaverse side.
The reward for staking CRO on the Crypto.org chain is 10% APR, a decent cryptocurrency yield compared to CRO’s potential.
CRO is listed on almost all the major crypto exchanges except Binance. Some people compare CRO with Binance coin, as Crypto.com’s user base has increased 10 times since the bull market of 2021.
Staking CRO doesn’t have any minimum staking requirement, but you have to wait 27 days before you want to unlock it. For flexible lock-up periods, try the Supercharger on Crypto.com.
Bonus: 4 Cryptocurrencies with Amazing Staking Rewards – Best Staking coins
Caution: This section is for very risky programs with staking rewards.
Most of these cryptocurrencies are relatively new, they don’t have a staking platform, and they are very risky as crypto assets. These are the high-risk, high-reward best staking coins for 2023 and after.
However, the higher the risk, the higher the potential rewards. So let’s start with one of the best staking crypto launched in 2022:
1) EVMOS
Evmos is a Proof of Stake (POS) network where users can transfer value between Cosmos ecosystem and the Ethereum one. EVMOS had an airdrop for both Cosmos and Ethereum users.
Evmos was launched in 2022, and it had one of the best staking rewards out there. Being one of the newest digital assets, the price and the APY fluctuated constantly.
Right now, EVMOS has a 115% APR – making it one of the best staking tokens out there. The USD coin value of EVMOS fluctuated between $0.3 and $3.8 since its launch.
2) Pancakeswap (CAKE)
Pancakeswap (CAKE) had one of the best crypto staking systems ever. When PancakeSwap launched, the CAKE token had a second token called SYRUP and you could get up to 3 figures APR on it.
At launch, CAKE was around $0.1 – generating one of the highest staking rewards on the market. The price pumped to $1 due to the staking reward, but it soon went back to $0.1.
Right when everyone thought CAKE was dead, the team started working and turned it into the best DEX on the Binance Smart Chain.
Right now, staking CAKE can be done on PancakeSwap platform, and the APR is between 2% to 48%. Locking CAKE helps increase the APR. CAKE also has DeFi farms with Binance coin, where the APR might be even better.
3) ApeCoin (APE)
ApeCoin (APE) is the Bored Ape Yacht Club affiliated cryptocurrency that intends to help create a massive decentralized web3.
You can earn staking rewards by locking your APE or even in a flexible program. The highest staking rewards for APE are on Binance, with 105% APR for APE locked for 120 days.
APE is a relatively new cryptocurrency, and such digital assets tend to have big price fluctuations. In January 2023, Ape has been hoovering around $5 but was over $22 in April 2022.
Is APE one of the best coins to stake? That’s up to you to decide, but the high crypto staking rewards, the backers, and the potential future benefits make it a good candidate.
4) JUNO
And finally, the Layer-1 Proof of Stake blockchain of Cosmos. JUNO is basically the ‘smaller sister’ of Cosmos (ATOM).
You can earn rewards by staking JUNO – more exactly a 34% APR. Its staking ratio is sitting at 49% and growing slowly.
As mentioned before, investing in JUNO is quite risky. The crypto earnings can fail to cover the drop in USD price, and your investment might be a loss.
If you’re keeping the JUNO on their staking platform, you can also be eligible for future airdrops, which are sometimes offered to JUNO or ATOM stakers.
What’s the best staking coin for me?
Unfortunately, we can’t recommend only one project. There are many top-staking coins, and picking only one would be one of the riskiest moves that you can make. If the project fails, you can lose everything.
Our advice: pick more best staking coins and diversify your portfolio. Remember: investing is a marathon and not a sprint.
Also, remember that one of the top staking coins was Bitconnect – which turned out to be a scam. Do your own due diligence, and if something sounds too good, it’s mostly a scam.
Key Takeaways
- Staking is the Proof of Stake algorithm process that involves a node’s appointment to validate the next block.
- If a validator does not do his job correctly, he will lose some or even all of his stake.
- Some of the best coins to stake are Ethereum (ETH), Cardano (ADA), Avalanche (AVAX), Cosmos (ATOM), Polkadot (DOT), and Polygon (MATIC).
- Your crypto holdings are at risk when you’re staking – the risk of the project failing, the value of the cryptocurrency decreasing, your wallet is hacked, or others.
