A Guide to Comparing Staking Platforms

| February 28, 2024

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While some market experts argue that cryptocurrency lacks the potential for generating passive income, the truth is that avenues such as staking platforms and rewards programs offer opportunities to earn interest from your existing crypto holdings.

Staking involves locking up your crypto to contribute to the operation of blockchains supporting specific cryptocurrencies, providing a means to earn rewards. Choosing the correct staking platform is crucial for those interested in staking or participating in a crypto rewards program, ensuring access to optimal resources and the highest yields. The following are the key reasons to consider when choosing the right staking platform.

Key Takeaways:

● Staking involves earning rewards by holding specific cryptocurrencies.

● Cryptocurrencies enable staking to utilize the Proof of Stake consensus mechanism, ensuring transaction verification and security without the involvement of a bank or payment processor.

● The main risk in staking crypto is the potential misbehavior by validators, leading to penalties such as slashing, diminishing stake value. Staking platforms vary, catering to retail users, digital asset experts, and institutional custodians.

Key factors for platform selection include security, rewards, supported assets, and fees. Conducting a comparative analysis of fees and returns across platforms is crucial for informed decision-making.

What is a crypto-staking platform?

Staking in cryptocurrency is the act of securing and supporting a blockchain network by locking or holding funds in a digital wallet. Typically associated with the Proof of Stake (PoS) protocol, this process involves committing coins or tokens to the network or crypto-staking platforms, which are locked and utilized for transaction validation or block creation.

The staking process unfolds through a series of steps: selecting a crypto asset employing PoS, locking the asset in a wallet or on a staking platform, and concluding with active participation in network activities. Crucially, staking platforms serve as a foundational element for PoS and its variants, allowing participants to lock their tokens, receive rewards, and engage in network governance.

How to choose the best crypto staking platform?

Selecting the optimal staking platform involves evaluating various options, encompassing both centralized and non-custodial solutions. Key considerations in your research for a staking platform may include:

Cryptocurrency platform

While Ethereum is often the focal point for staking in the minds of investors, it’s crucial to recognize the vast array of cryptocurrencies available for staking. Beyond those utilizing a Proof of Stake (PoS) mechanism, other cryptocurrencies can be staked through specialized third-party services or DeFi protocols. Notably, lesser-known cryptocurrencies frequently present a higher return on investment than their more popular counterparts, expanding the possibilities for investors seeking diverse staking opportunities.

ROR

In contrast to the interest rates offered by conventional financial providers, staking yields (APR/APY) can reach double or even triple digits. However, these elevated returns often come with increased risk, highlighting the importance of thorough research before making investment decisions.

Trading capabilities

Essential trading features encompass critical metrics such as the variety of cryptocurrencies for trading, acceptance of fiat currencies, overall liquidity, and trading fees. Evaluating these key elements is pivotal for investors seeking a comprehensive understanding of an exchange’s functionality, ensuring informed decisions in the dynamic landscape of cryptocurrency trading.

Associated Risk

Crypto staking, like all cryptocurrency investments, carries inherent risks. Notably, the industry witnessed the collapse of prominent yield platforms like Celsius and BlockFi in 2022, leaving many investors in suspense regarding the return on their frozen investments. Determining the safest crypto or NFT or DeFi staking platforms poses a challenge, but as a general guideline, opting for larger centralized platforms with insurance or those with transparent proof of reserves provides a relatively secure option for custodial staking. Alternatively, non-custodial crypto staking platforms offer a route where the only entity requiring trust with your crypto is yourself.

Asset Custody

Custodial (centralized) and non-custodial (decentralized) staking platforms present distinct advantages and drawbacks, necessitating careful consideration of their respective merits and risks. Prior to making a decision, it is crucial to assess the nuances of each option, weighing the benefits and potential drawbacks. A comprehensive understanding of these differences is pivotal in determining the most suitable custody and staking platform for individual and institutional preferences and requirements.

Convenient

For newcomers in the crypto space, navigating certain crypto staking platforms, especially non-custodial DeFi platforms, can be an intimidating prospect. Thankfully, major centralized exchanges provide straightforward one-click staking solutions tailored for investors entering the market, enabling them to earn a passive income with minimal technical knowledge.

Country support

When dealing with centralized staking platforms, verifying if the platform provides staking products within your country is often essential. Notably, individuals in the United States may face limitations due to the recent SEC crackdown on crypto staking platforms, leading to the withdrawal of staking products by numerous exchanges for US investors.

Top Crypto Staking Platforms

Now that the cautionary note has been addressed, let’s explore some of the most reputable crypto, Defi, and NFT staking platforms, highlighting the reasons that make each of them a compelling choice. By the end, you’ll be equipped to make an informed decision and select the crypto-staking platform that aligns with your preferences.

Centralized Platforms

Coinbase exchange

Initiating crypto rewards on Coinbase is most straightforward through Coinbase Earn. Coinbase Earn offers an opportunity to acquire cryptocurrencies by engaging with educational content, typically in the form of concise videos. Since its inception in 2018, Coinbase Earn has disbursed over $100 million in various cryptocurrencies, including 0x, Basic Attention Token, Zcash, Stellar Lumens, EOS, Dai, Tezos, Orchid, Compound, Celo, Nucypher, and the Graph. Many of these cryptocurrencies leverage the “Proof of Stake” consensus mechanism, allowing users to earn rewards by contributing to network security through staking. Coinbase users, eligible via the main app or website, can stake Tezos, Cosmos, or ETH, potentially earning up to 6% APY as of June 2021, contingent on the staked asset type.

Crypto.com

Crypto.com provides an extensive array of staking options encompassing over 21 cryptocurrencies, ranging from popular choices like Ethereum, Cardano, and Tether to lesser-known projects such as Celer Network, Elrond, and Pax Dollar. The interest rates offered on Crypto.com staking products are contingent on four key factors: the specific token, the staked amount, CRO lockup status, and the duration of the stake. Investors with a locked CRO enjoy more favorable rates, and extended staking periods generally yield better interest rates. Additionally, private members receive exclusive perks, including an additional 2% PA distributed in CRO tokens. Despite varying factors, Crypto.com advertises estimated PA rates for staking between 1% to 12.5%, dependent on the term, CRO lockup, and private membership status, making it a potentially appealing option for investors seeking reliability and trustworthiness in a centralized crypto staking platform.

 

Binance

Binance Earn presents a comprehensive platform for investors seeking to earn interest on their dormant assets, offering a diverse range of staking, farming, and dual investment products. Notably, Binance facilitates ETH 2.0 staking, enabling users to stake ETH effortlessly and receive BETH tokens at a 1:1 ratio, ensuring liquidity retention. As the leading cryptocurrency exchange with the highest daily volume, Binance stands out as one of the premier crypto staking platforms, supporting over 100 staking coins. Locked staking on Binance typically entails a minimum holding period of 30 days, although certain coins permit shorter staking periods with potentially higher annualized percentage yield (APY) and increased security. For more flexible locking periods, DeFi staking platform is available, albeit with associated risks. Binance further extends investment options with high-yield Simple Earn and Dual Investment products, emphasizing the importance of due diligence to comprehend associated risks. Additionally, the platform offers an auto-invest feature, systematically investing a predetermined amount into a chosen cryptocurrency and providing daily earnings automatically.

Decentralized platform

Lido

Lido DAO serves as a non-custodial staking solution on Ethereum, Terra, Polygon, and Solana blockchains. It allows individuals and businesses to pool token assets for staking on Proof-of-Stake (PoS) blockchains. The decentralized autonomous organization (DAO) enables users to stake tokens without locking assets, surpassing minimum thresholds, or managing staking infrastructure. Lido’s unique “liquid staking” methodology offers dual incentives, combining rewards from staked tokens on Layer-1 networks with additional rewards through a staked token pegged 1:1 to the underlying staked assets.

Institutional platform

BitGo

BitGo presently facilitates staking for the following cryptocurrencies: Algorand, Avalanche, Casper, Dash, Ethereum, NEAR Protocol, NuCypher, Polygon (ERC-20), SKALE Network, Solana, Stacks, and Tezos.

When you stake with BitGo, the platform provides a straightforward and adaptable solution to earn rewards on your digital assets. Utilizing one-click staking, you can quickly start earning rewards directly from your BitGo crypto wallet and conveniently monitor all your staked assets from a unified perspective. With support for various assets and the option to choose between our default validator or MMI integration, you have the flexibility to customize your staking experience according to your unique requirements. Delegate confidently, assured that your funds are safeguarded and uptime is optimized for maximizing potential rewards.

Conclusion

Opting for centralized exchanges for staking can be a user-friendly choice, especially for individuals lacking the technical expertise or resources to manage their nodes. Renowned exchanges like Coinbase, Binance, Kucoin, Bitstamp, and OKX offer educational resources and support to assist users in initiating their staking journey. With some knowledge and thoughtful consideration, staking becomes a potentially lucrative means of supporting the blockchain ecosystem while earning passive income. Nevertheless, users must be aware of potential risks associated with staking on exchanges. Beginners are advised to conduct thorough research, considering factors such as staking rewards, lock-up periods, and withdrawal restrictions. Understanding the underlying technology and associated risks is crucial for a well-informed approach to staking.

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