June 14, 2021

Choosing a cryptocurrency for staking in 2021

Choosing a cryptocurrency for staking in 2021

According to a recent report, the aggregate value of PoS coin staking rewards (i.e. working on based on the Proof-of-Stake consensus algorithm) will reach $ 18.9 billion by the end of 2021. Compared to last year, this figure will almost double.

Successful preparation contributes a lot to this.to the launch of Ethereum 2.0 - an update of Vitalik Buterin's blockchain project, which will transfer the network to PoS. But it is also important that today staking is one of the most convenient and effective ways to get new coins on the crypto market. In light of this, we have compiled for you the most up-to-date selection of the best cryptocurrencies for staking in 2021.

The most reliable and profitable platform for 2021for staking is the largest crypto exchange Binance. We have prepared a detailed guide for launching staking on this site: How to get passive income from storing cryptocurrency on the Binance exchange?

What is staking?

To put it simply, staking is a processstoring coins on a cryptocurrency wallet, for which a reward is paid. Basically, staking is available for coins whose blockchains operate on the Proof-of-Stake (PoS) consensus algorithm and its variations, but not required. So, for example, the staking mechanism can be implemented through a smart contract or in DeFi protocols. For detailed information on how the various consensus algorithms work, see here.

If we talk about PoS blockchains, then here it isstaking ensures the health of the entire network. With the help of this mechanism, transactions are confirmed and new blocks are generated in the blockchain, as well as new network coins are mined. Validators are responsible for all these processes in PoS blockchains.

Unlike mining, staking is notprovides for the availability of expensive computing equipment. Instead, staking participants (usually validators) must keep the internal cryptocurrencies of the blockchain network on their balance sheets. Basically, coins participating in staking are frozen for a certain period.

In the case of PoS staking, the higher the balancevalidator, the more chances he has to be selected to confirm a new block and receive a reward in the form of new coins. Generally, the more coins participate in the stake, the higher the overall reward of the validators. If the validator acts to the detriment of the network, he will receive a penalty or even be barred from validating transactions.

There are several versions of the PoS algorithm on the market, ineach of which uses its own staking scheme. So, for example, in some cryptocurrency holders provide their coins to validators in exchange for part of their reward. This is called delegation. In others, for example, as in Algorand, any holder of the ALGO internal cryptocurrency can be staked by simply storing coins in the wallet.

As we wrote above, there are alsounique staking solutions. For example, in the UMI cryptocurrency, staking is implemented through a smart contract, while the network itself operates on the basis of the Proof-of-Authority (PoA) consensus algorithm. This unique approach allows UMI holders to participate in staking without starting nodes, delegating, and various technical difficulties. Also, there is no need for users to freeze their assets.

How to participate in staking?

At first glance, classic staking seems to be a simple matter: you just need to freeze the coins in your wallet and you can count on a reward. In practice, however, in most coins, things are a little more complicated.

So, for example, to become a validator inPoS blockchains often need to have a minimal stake. For validators of the Tezos blockchain network, the entry threshold is 10,000 XTZ, or about $ 69,200. And for Ethereum 2.0 validators - 32 ETH, or more than $ 138,400 at the rate on the day the article was published.

Let's remind:to become a validator, coins must be frozen in the wallet for a certain period. At the same time, each network sets the freezing period individually. In some cases, this is a couple of days or weeks, but in the case of the same Ethereum 2.0, we can talk about several years (before the full transition to the PoS consensus algorithm). Also, PoS network validators need to synchronize their wallet with the blockchain and make sure that their node is constantly connected to the network. Otherwise, the validator may receive a penalty.

Therefore, many PoS cryptocurrency holdersprefer to delegate their coins. Often, crypto exchanges play the role of large validators, which launch their own nodes in PoS blockchains. So, PoS staking services are provided by almost all top exchanges on the market - Binance, Coinbase, Kraken, Hotbit, KuCoin, Huobi and Bithumb, among many others. To participate in staking, users of these trading platforms only need to delegate their cryptocurrencies to them.

There are also manystaking pools and SaaS platforms (Staking as a Service). Members of these services pool their coins in order to increase the likelihood of being selected as a validator and receive a reward. They all work on a similar principle - to participate in staking, you need to register on the website or service platform and delegate your PoS coins. In return, you will be charged interest in proportion to the size of your steak.

Also available on the crypto market is the so-calledcold staking. This type of staking is supported by hardware wallets like Ledger or Trezor. To participate in cold staking, you need to keep your PoS coins in your hardware wallet at all times. As soon as the coin holder transfers them to another address, cold staking stops.

But not only cold crypto wallets offerthe possibility of staking. For example, the Ethereum Trust Wallet and the Atomic Wallet multicurrency cryptocurrency wallet are popular solutions among hot cryptocurrency storages that support staking. Read more about the different types of crypto wallets in our material.

Best cryptocurrencies for staking

More than 100 are represented on the crypto marketcryptocurrencies whose holders can participate in staking. We have selected for you the most popular projects, whose coins bring the greatest reward during staking.

Ethereum 2.0

Despite the fact that the full transition of Ethereum to the PoS algorithm can take from one and a half to two years, ETH has already become one of the most popular coins for staking.

Ethereum phase zero 2.0 was launched on December 1, 2020. To do this, 16,384 validators had to contribute a minimum stake of 32 ETH and start working on the Beacon Chain, a new blockchain that exists in parallel with Ethereum 1.0. It is thanks to the launch of the Beacon Chain in Ethereum 2.0 that ETH staking is already available.

Ethereum Steakin 2.0 is already available on Binance.

As of May 10, 133,327 validators are responsible for maintaining the performance of Ethereum 2.0, the total stake of which is 4,421,858 ETH:

“The number of new validators has grown significantly from 4May. Now 137,917 validators have made deposits of 4,421,858 ETH (17 billion at a price of $ 3,882, 3.8% of the total ETH). Active validators: 133 327. Queue: 4 590. Number of new validators per day: ~ 1456 ".

ETH is the second largest cryptocurrency in terms of capitalization,which has already renewed its price highs several times this year. Over the past 12 months, the value of ETH has grown 13 times, and since the beginning of the year - 5.5 times, from $ 746 in January to $ 4,279 today. And it is likely that ETH will maintain its bullish uptrend.

Now staking ETH brings up to 7.15% new coins per year. But as the number of frozen ETH in staking increases, this figure will decrease - at the start, validators received 21.6% of new coins per year. However, it should be borne in mind that if ETH maintains a bullish trend, then the real benefit from staking will be much higher.

Choosing a cryptocurrency for staking in 2021

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To become a validator in Ethereum 2.0, you need to freeze at least 32 ETH - more than $ 138,400 at the time of the article's release. Therefore, the easiest way to stake these coins is through exchanges, for example, through Binance. Also on Coinbase, a limited number of users have started staking ETH since mid-April with up to 6% new coins per year.

At the same time, due to the fact that ETH withdrawal will be availableonly after the full transition to PoS, exchanges issue secondary tokens to users, tied to the ETH. For example, Binance issues tokens with the ticker BETH. But Kraken does not offer such an option at all: users will be able to withdraw coins from ETH 2.0 after a complete network update.

UMI

UMI is the leader in our ranking in terms of staking rewards. This universal blockchain payment platform allows instant transfers around the world with no fees.

Already now the developers of this blockchain networkmanaged to achieve a speed of 4,369 transactions per second, and in the test network - up to 65,535. At the same time, potentially UMI will be able to process up to 1 million transactions per second. Also, technically, UMI is a powerful blockchain platform capable of creating and executing smart contracts of any complexity.

The UMI cryptocurrency was launched in June 2020. Since then, the number of addresses on the network has exceeded 450,000. In total, 148 million UMIs have been issued during this time, 130 million of which (87%) are staked.

Cryptocurrency staking is available to anyoneto the user, the UMI team made this process extremely simple and straightforward. To stake a coin, you do not need to launch nodes, synchronize wallets with the blockchain, or deal with technical difficulties. All you need to do is create a UMI wallet and join one of the staking pools: ROY Club or ISP Club. Membership in the ROY Club allows you to create up to 32% of new coins per month, and in the future - up to 40%. As for the ISP Club, this pool brings in 24% of new UMIs per month. Thus, UMI staking in pools brings the highest percentage of new coins on the crypto market.

The UMI blockchain is built on a modernizedProof-of-Authority (PoA) algorithm, and a special smart contract is responsible for staking. It is the smart contract that monitors that all staking conditions are met, it allows you to enter the staking pool and credits new coins directly to the wallet.

Thanks to the smart contract, UMI staking has unique qualities:

  • You don't need to freeze UMI, they can be withdrawn and sold at any time.
  • Interest is charged 24/7, not once a day or only once a month.
  • UMIs remain in the user's wallet. They do not need to be transferred to the validator, they do not leave the wallet, and new coins appear directly in it. Thus, only the user has access to his UMI, even while staking;
  • The UMI rate is supported by bitcoin liquidity. The UMI team put up 365 BTC ($ 20.7 million) into the order book for the purchase of UMI cryptocurrency at the rate of $ 0.95. This “wall” protects the coin rate from a decline, preventing it from falling below the specified value, even during periods of large or massive sales.

Moreover, UMI recently entered the DeFi market. So, on May 6, the ISP Club staking pool team tokenized the coin and added it to the most popular decentralized cryptocurrency exchange Uniswap.

However, the team does not stop there - it hasbig plans for the future: for example, add support for offline transactions, launch a line of various decentralized applications (dApps) and decentralized exchanges (DEX).

Cardano

Cardano is a decentralized ecosystem that is often prophesied to replace Ethereum.

The development of the project has been carried out since 2015 underled by mathematician and Ethereum co-founder Charles Hoskinson. Until 2020, the project team worked on the launch of the Cardano mainnet and its native ADA coin. And in June last year, the long-awaited launch of the Shelley update took place, which activated the Delegated Proof-of-Stake (dPoS) consensus algorithm and the possibility of staking ADA at 4-5% per annum. The activation of this update was one of the main drivers of ADA value growth in the past year - in 2020, the coin grew by 430%.

In March of this year, the project activated the followingnetwork development stage - Goguen update. After its final implementation, users will be able to create their own tokens, launch smart contracts, decentralized applications (dApps) and DeFi protocols. In total, Cardano will go through five stages of development, which you can read about in our recent project overview.

Successful activation of updates is positiveaffected the price of ADA. Over the past 12 months, the price of the coin has increased by 27 times, and since the beginning of 2021 - by 7.5 times. Now ADA ranks 6th in terms of capitalization in the CoinMarketCap rating, which is $ 55.4 billion. Most experts are confident that in the medium term, ADA will remain bullish. And some analysts do believe that the coin will rise in price 10–20 times by the end of next year.

ADA has excellent prospects for continued growth.There are two more major updates ahead, which will make Cardano a fully decentralized environment, as they completely transfer project management into the hands of the community. Moreover, these updates could make Cardano a better blockchain than Ethereum from a technical point of view.

According to AdaStat, ADA stakes over 515813 members who delegate 23 billion coins. Thus, ADA is the leader among other projects in terms of the volume of coins in staking, because about 73% of all issued coins are blocked in it.

To start staking ADA, you need tojoin an existing staking pool or start your own (however, this option is only recommended for advanced users). Now there are 2,471 pools in the network and their number is constantly increasing. At the same time, you can join the pool through the project's native wallets - Daedalus and Yoroi. Every 20 days, Cardano automatically credits ADA staking rewards. At the same time, coins are not frozen during staking.

To date, ADA staking brings in about 7.24% of new coins per year, however, in fact, users usually "earn" much more due to a significant increase in the rate. But as new staking pools are connected, this figure will decrease.

Polkadot

Polkadot (DOT) - decentralizedblockchain protocol that allows you to launch and combine blockchains into a single network. Thus, Polkadot is a unique decentralized environment where different blockchain networks can interact with each other. According to the team's plans, Polkadot will be the basis for a future version of the decentralized Internet Web 3.0.

The native cryptocurrency of the project, DOT, enteredcrypto market in August 2020. Since then, its value has grown from $ 2.72 to $ 40.15 - almost 15 times. At the same time, the capitalization of the coin already exceeds $ 38.3 billion, which puts it in 9th place in the CoinMarketCap rating.

Minimum validator stake is 10,000DOT, or $ 401,500 on the day the article was published. Therefore, mainly large pools or crypto-exchanges become the validators of Polkadot. To start staking, you need to join one of the providers of this type of service. For example, DOT staking is available on the Binance crypto exchange.

As for the amount of the remuneration, itvaries depending on the DOT freeze time. Staking will bring in 13.15% new coins per year, provided the coins are frozen for 30 days. But this figure can increase to 22% if the freezing period is 90 days.

Also Polkadot has an experimental networkKusama, which actually became an independent project. Its KSM token ranks 47th in terms of capitalization, and its staking yield is about 13.8% of new coins per year.

Binance coin

Binance Coin (BNB) is the native coin of the largest crypto exchange Binance, as well as the Binance Chain (BC) and Binance Smart Chain (BSC) blockchain networks.

Binance Chain - decentralized blockchaincrypto exchange Binance DEX, whose users can directly trade cryptocurrencies among themselves. And Binance Smart Chain is a blockchain network for dApps and smart contract developers. BNB is the native coin of both networks. In Binance Chain, the coin is used to pay fees on Binance DEX, in BSC - to deploy smart contracts, cause, staking and exchange tokens.

Since the start of trading, BNB has been able to skyrocket bythird place in terms of capitalization in the CoinMarketCap rating. Now the coin's capitalization is $ 101.5 billion, and its value has risen to a record $ 659 per coin. Among the key reasons for the BNB rally is the transition of DeFi project users from Ethereum to BSC.

Binance Smart Chain operates on a uniquehybrid Proof-of-Staked Authority (PoSA) algorithm using Proof-of-Stake and Proof-of-Authority. Its peculiarity is that validators do not receive rewards for freezing BNB, but earn only through commissions. To avoid inflation, Binance “burns” - that is, permanently withdraws from circulation - a portion of the BNB coins on a quarterly basis.

To become a BSC validator, you need to freeze at least 10,000 BNB - $ 659,000. Launching a validator node will bring 23.16% new BNBs per year. For delegates, this indicator is lower - 18.39% coins per year.However, there is no minimum entry threshold for delegates to participate in staking. Moreover, the blocking period for BNB during staking is only 7 days, and rewards are paid on a daily basis.

The most convenient way to stake BNB is throughcrypto exchange Binance. To do this, you need to create an account on the trading platform, buy BNB and delegate your coins to validators, this is done in a few clicks. Read more about staking with Binance here.

Solana

Solana is a platform for running decentralized applications (dApps) and smart contracts.

The project was founded in 2017.At the same time, the key feature of Solana is that this blockchain network works both on PoS and on its own Proof-of-History (PoH) consensus algorithm. The essence of this algorithm boils down to the fact that different network nodes work independently of each other, but at a given time they must all synchronize with each other. As a result, the transaction processing speed in Solana can reach 191,000 operations per second. And according to the developers, this is far from the limit for the network.

Trading in the internal cryptocurrency of the project, SOL,launched in April 2020, and over the year the value of the coin has grown 60 times - from $ 0.77 to $ 46.9. SOL is currently ranked 17th in terms of capitalization in the CoinMarketCap rating.

SOL staking is available to any network userthrough a native or third-party crypto wallet. So, for example, SOL staking is supported by the popular Ledger Nano hardware crypto wallets. At the same time, to participate in staking, you need to create a special staking account that differs from the wallet address. Alternatively, you can submit your SOLs to one of 607 validators, each offering a different reward.

Current average remuneration fromSOL staking accounts for 10.63% of new coins per year. At the same time, the indicator can be even higher when staking coins through exchanges. For example, Binance offers the so-called SOL fixed staking, in which the amount of reward depends on the period of the freeze and the maximum stake limit.

Choosing a cryptocurrency for staking in 2021

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Avalanche

Avalanche (AVAX) - decentralized platformto launch and exchange tokens, smart contracts, dApps and DeFi applications. The main goal of the developers is to provide the crypto market with a space where users can seamlessly exchange tokens and coins from different blockchains.

Avalanche mainnet launched in September2020 year. The project is being developed by AVA Labds, one of the founders of which was the creator of Bitcoin NG, Emin Gün Sirer. Along with the launch of the Avalanche mainnet, the native AVAX coin was also launched, which is used as the base unit of account for paying for actions on the network (for example, launching dApps or deploying smart contracts). Avalanche validator rewards are also paid in AVAX.

Since the start of trading, the cost of AVAX has increased by8 times - from $ 5 to $ 40.90. And at its peak in February, the price of the coin even reached $ 53. At the same time, the burning mechanism is also integrated into Avalanche, which removes from the AVAX turnover, spent on paying commissions for transactions in the network.

It is worth noting that the entry threshold for validatorsrather high - from 2,000 AVAX, which at the current rate is about $ 81,800. For delegates, there is also a minimum stake size - 25 AVAX ($ 1,022). At the same time, during staking, coins are frozen for at least 2 weeks, and maximum for a year. The network charges a 2% commission for delegation.

AVAX can be staked through a native web walletAvalanche Wallet. Currently, network validators receive 5.38% of new coins per year, and delegates - 5.1%. On the other hand, AVAX staking can be even more profitable on exchanges. For example, staking 30 AVAX on Binance for 15 days will generate 32.79% new coins per year.

Choosing a cryptocurrency for staking in 2021

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Algorand

Algorand (ALGO) - decentralized paymentplatform launched in June 2019. Silvio Micali, a well-known cryptographer, Turing Prize winner and professor at the Massachusetts Institute of Technology (MIT), is behind the development of this blockchain platform.

The Algorand network was created to work with financialsector and banking institutions. Therefore, it was based on technologies that ensure high speed of transaction processing, security of all network participants and decentralization. Thus, Micali's team tried to solve the so-called blockchain scalability trilemma, within which the developers of modern blockchains are forced to make compromises and sacrifice speed, security or decentralization to better optimize the network. Among the key competitive advantages of Algorand is its high speed, up to 1,000 transactions per second.

Algorand uses a modified versionPoS is a Pure Proof-of-Stake (PPoS) consensus algorithm. This means that the network has validators that launch full nodes and verify transactions, but there are no delegates - any user who holds at least 1 ALGO in the native Algorand Wallet or in one of the wallets that support this coin can participate in staking:

Choosing a cryptocurrency for staking in 2021

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At the start of trading, the ALGO coin cost $ 2.15, but now its price has dropped to $ 1.40. ALGO staking brings from 5% to 10% of new coins per year, depending on the platform used for staking - a native wallet, or a third-party, or crypto exchange.

ALGO coin is available on all major exchanges, inincluding Binance, Coinbase, Kraken, OKEx, Huobi and BitMEX among others. Also, ALGO staking does not require freezing coins on the wallet - they can be withdrawn from staking and sold at any time.

Terra

Terra (LUNA) - decentralized paymentprotocol with algorithmic stablecoins pegged to fiat currencies. The main project network was launched in 2019. The goal of the Terra developers is to offer the crypto market a unique ecosystem for the development of Decentralized Finance (DeFi).

There are two coins featured in this ecosystem:Fiat-based Terra stablecoins and LUNA, a coin that acts as a stabilizer for Terra's exchange rate. Thus, the main goal of LUNA is to protect the ecosystem from the high volatility of the Terra exchange rate.

How it works?An algorithm built into the blockchain is responsible for controlling the supply and demand of the Terra coin, the value of which must be held at 1 SDR (Special Drawing Rights). The SDR is an international reserve asset created by the IMF in 1969, the value of which is determined by the exchange rate of the US dollar (41.73%), the euro (30.93%), the Chinese yuan (10.92%), the Japanese yen (8.33%) and the British pound sterling (8.09%) ).

If Terra falls below the target rate in1 SDR, then the protocol automatically buys 1 Terra coin and sells LUNA for 1 SDR. Conversely, if the value of Terra rises above 1 SDR, then the protocol sells 1 Terra coin, buying out LUNA for 1 SDR.

The Terra ecosystem now offers stablecoins pegged to the US dollar (Terra USD), South Korean won (Terra KRT), Mongolian tugrik (Terra MNT), and the IMF's basket of currencies (Terra SDR).

As for staking, a coin is involvedLUNA. Until the beginning of this year, the price of LUNA remained practically unchanged and ranged from $ 0.15 to $ 0.5. But since the beginning of 2021, the price has increased 26 times - to $ 17.39. This LUNA rally is driven by several factors:

  • an increase in the emission of the dollar stablecoin Terra USD,
  • the launch of TerraBridge technology, which allows transactions between the Terra, Ethereum and Binance Smart Chain blockchains,
  • as well as an investment in the project in the amount of $ 25 million from the well-known investor and head of Galaxy Digital Mike Novogratz.

Now LUNA staking brings about 10.65% новых монет в год. Для стейкинга достаточно скачать приложение Terra Station или воспользоваться его веб-версией, где предложена опция делегирования монет между несколькими валидаторами. При этом минимального размера стейка не предусмотрено.

LUNA staking is also supported by trading platforms such as Binance, Bithumb, Coinone, Huobi Global and BKEX.

Staking prospects

Mining is gradually losing its relevance - thisthe method of obtaining new coins is not so effective, it requires serious investments and technical knowledge. And although it is still profitable, new blockchain projects based on PoW algorithms are almost never launched.

It is cryptocurrencies with staking (mainly onPoS and its modifications) are becoming the standard for launching new blockchain projects. For this reason, according to forecasts of the Ethereum infrastructure company Staked, in 2021, holders of PoS cryptocurrencies will receive rewards in the amount of $ 18.9 billion, which is almost double compared to last year - $ 10 billion in 2020.

Among the key reasons for the growth of this sector are -the upcoming launch of the updated version of Ethereum 2.0. But outside of Ethereum, there is another staking growth driver: cryptocurrency exchanges. Today, all top trading platforms offer staking solutions or connecting staking pools. Thus, even an ordinary cryptocurrency user has access to convenient staking tools.

The most reliable and profitable platform for 2021for staking is the largest crypto exchange Binance. We have prepared a detailed guide: How to get passive income from storing cryptocurrency on the Binance exchange?

We are sure that in the coming years, the popularity of staking as a passive way to get new cryptocurrencies will increase significantly.

Choosing a cryptocurrency for staking in 2021

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