What is staking
Staking ensures the functionality of the blockchain thanks to the PoS (Proof of Stake) algorithm. The larger the amount that a user blocks on their staking wallet, the more additional blocks they can create in the chain. Staking allows you to earn money on crypto without having to buy expensive equipment and pay a lot of money for the electricity used. This method of earning is comparable to a bank deposit. Unlike staking, mining works thanks to the PoW (Proof of Work) algorithm, the principle of protecting the network from various types of abuse of services.
Proof of Work (mining)
Mining new blocks requires powerful equipment, which often costs a lot of money. High energy costs are required, which entails additional pollution of the environment. Hacking the network requires a very expensive attack of 51%, which is too expensive for hackers. Earning money on mining requires in-depth knowledge of cryptocurrency technologies. There is a risk of forks (branching of blockchain chains to modify or create a new blockchain).
Proof of Stake (staking)
In order to mine new blocks, you need to purchase and store a certain amount of tokens in your wallet. No additional costs are required. The larger the amount you hold in stacks, the more influence you have during voting related to the development of the network. Somewhat similar to the influence of shareholders on the development of a company. All knowledge comes down to the ability to buy cryptocurrency and make transfers. No need for forks.
Mining requires a high level of computing power, and staking often has a very low entry threshold. To start earning, you just need to purchase cryptocurrency and hold it in your wallet without spending coins on your needs. In fairness, we note that some projects require blocking large amounts to participate in staking, which is sometimes comparable in cost to buying mining equipment. For example, to participate in ETH 2.0 staking, you need to block 32 ETH tokens on your wallet with an annual interest rate of up to 20%. However, there are not many such projects, and most cryptocurrencies using PoS allow you to invest relatively small amounts.
Types of staking
In addition to the standard algorithm for investing in staking - block a certain amount on your account and receive interest on it - different blockchains have their own conditions for placing deposits.
Fixed staking
With fixed staking, the user immediately indicates for how long he or she is blocking assets on his or her account. You can choose any term that is convenient for you, but you cannot change it. If you block coins on your wallet for two months, you will not be able to withdraw them after a month. The interest rate for fixed staking is higher than for other types, which is why it brings investors more money. Staking in ETH 2.0 is just a fixed type.
DeFi Staking
Decentralized finance (DeFi) allows cryptocurrency owners to receive lending, forecasting, insurance, and other services. Such projects operate on smart contracts that allow transactions to be automatically completed with previously agreed terms. The main difference between DeFi staking and regular staking is that third parties participate in this process, for example, companies or individual users who borrow tokens from you at a certain interest rate. Smart contracts can be vulnerable, so we recommend checking them carefully before concluding transactions. Although, in general, the system is designed in such a way that the execution of transactions is well controlled and all calculations are made as accurately as possible.
DeFi staking is good for the following features:
allows you to quickly withdraw funds (interest is accrued daily, there is no need to wait for payments for months),
higher yield than other PoS blockchains (instead of a maximum of 10% per annum, you can get about 100%, it all depends on the investment period and the specific coin),
high guarantees of payments that are provided by reputable platforms (like ByBit - the exchange has its own Web3 ecosystem, including the ByBit Wallet, NFT marketplace, non-custodial decentralized exchange ApeX Pro, high-performance modular Ethereum 2nd layer Mantle network and the Yeeha Games platform).
Perpetual staking
This type of staking allows the owner to withdraw funds from the wallet at any time convenient for him. Interest is accrued until the user opens an order to sell tokens, or until he withdraws them from the system. Interest is accrued every day from the moment the transaction is concluded, but funds can usually be withdrawn only once a month. This type of staking is ideal for those coin owners who like to manage their tokens more flexibly. Coins that are a deposit can be withdrawn at any time, for example, immediately after the interest is paid.
EMCD
EMCD is one of the largest mining pools in the world, founded in 2017 by enthusiasts and experts in the field of blockchain. Initially, the project was aimed at miners, but over time, the platform began to offer staking services through its separate service Coinhold. Today, EMCD ranks 7th in the world. Since its launch, the platform has attracted more than 300,000 users worldwide.
Coinhold by EMCD offers fixed and flexible rates, as well as the ability to partially withdraw funds without penalties. Users can earn up to 14% annual percentage yield (APY) with daily accruals. The percentage depends on the asset being staked.
Coinhold clients can earn by staking cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), as well as stablecoins Tether USD (USDT) and Circle USD (USDC).
The platform stands out for its user-friendly and intuitive interface, which makes it easy to track asset returns. All user funds are stored in cold wallets, ensuring a high level of security.
Cryptocurrency exchanges for staking
Cryptocurrency exchanges with staking are centralized trading platforms that provide users with the opportunity to earn passive income on their crypto assets through staking. Such exchanges act as intermediaries, simplifying the process of participation in Proof-of-Stake (PoS) blockchains, and users do not need technical training to launch their own validator.
Bybit is one of the most popular cryptocurrency exchanges, providing a wide range of products for active and passive earnings. The exchange offers two types of staking: on-chain and deposits. The yield for popular assets is as follows: up to 11% per annum for USDT, 7% for ETH2. Bybit is fully translated into Russian and has a user-friendly interface, which makes it attractive to users from the CIS countries. The platform supports trading on the spot and futures markets, and also provides access to web3 tools, including decentralized finance. Verification is mandatory for all users.
OKX offers two types of staking products: on-chain and deposits. The staking yield for USDT is up to 10%, and ETH2 staking gives 3.54% per annum. In addition to standard tools, the platform provides access to Shark Fin and dual-currency investments, which allows users to diversify their earning strategies. Users can choose between flexible and fixed asset staking conditions, depending on their goals and preferences. The exchange is available in several languages, including Russian, and requires mandatory verification.
Binance has combined all passive income tools in one section called Simple Earn, where more than 30 coins and tokens are available for staking. ETH2 staking gives a yield of 2.92%. Users can choose between fixed and flexible asset staking conditions. The platform has a user-friendly interface, a large selection of cryptocurrencies, and the ability to earn even on small investments. However, the rates for ETH2 are relatively low compared to competitors. Verification is required to use all the platform's features.
MEXC provides an opportunity to earn on-chain staking and deposits. The yield of ETH2 staking is 4.8% per annum. The platform offers users two options: perpetual and fixed deposits. The profit from staking is credited directly to the exchange wallet and can be reinvested or used for trading operations. MEXC does not require mandatory verification, which makes it convenient for users who want to remain anonymous.
BingX is known for its temporary promotions, during which the staking yield can reach 80% per annum for USDT. For example, placing USDT for a period of 7 days brings a profit of 60% to 80% per annum as part of the promotions. The rest of the time, the platform offers the opportunity to earn passively through deposits and copy trading. Verification on the platform is not required. BingX supports spot and futures trading, and also provides tools for demo trading.
Staking Wallets
Staking wallets are applications or devices that allow users to store cryptocurrency and earn passive income by participating in the Proof-of-Stake (PoS) mechanism. Unlike crypto exchanges, wallets allow you to stake assets while maintaining full control over them.
Trust Wallet is a non-custodial crypto wallet that supports staking of 24 coins, including ETH2 with a yield of 3.37%. The application is available on Android, iOS, and as a browser extension. The wallet provides full user control over their assets and supports many blockchains and tokens. Additionally, Trust Wallet allows you to store NFTs, connect to dApps, and buy cryptocurrency with a bank card.
Atomic Wallet is a multi-platform non-custodial wallet available on Android, iOS, Windows, Linux, and macOS. It supports staking of 23 coins, including ETH2 with a yield of about 5%. Rewards from staked assets are automatically credited to the wallet balance. You can exchange and buy cryptocurrencies within the application. Atomic Wallet has its own AWC token, which gives users additional benefits, such as increased profitability.
Ledger is a hardware wallet that provides the highest possible level of security for storing and staking cryptocurrencies. It supports all popular PoS coins with a yield of 4% to 7% per annum for ETH2. You can manage the staking process through PC and smartphone applications by connecting Ledger to external services such as Lido or Binance.
Specialized staking platforms
Staking platforms are specialized services that offer users the opportunity to earn on cryptocurrencies that work on the Proof-of-Stake (PoS) algorithm or its variations. The main goal of such platforms is to make the staking process as accessible and convenient as possible for both beginners and experienced users.
Lido Finance is a decentralized protocol designed for liquid Ethereum staking. Instead of standard ETH, users receive STETH tokens, which represent the staked ether. STETH can be used on decentralized platforms or exchanged back for ETH. The staking yield is 3.4% per annum. Staked offers staking for more than 20 cryptocurrencies, including ETH, ADA, SOL, DOT, and MATIC. The yield varies from 3.3% to 36.1% per annum, depending on the chosen coin. The platform is aimed at institutional investors and provides the highest level of security due to the distribution of nodes across several cloud servers.