Staking crypto involves locking up your cryptocurrency assets for an extended period of time to unlock rewards or earn interest on your investments. These rewards come in the form of extra cryptocurrencies, making staking one of the easiest ways to earn crypto!
In this article, we will discuss crypto staking, how to stake crypto assets, and what the best crypto staking platforms in 2021 are. At the end of this article, we will have answered an important question, “Is crypto staking worth it?”
Best Crypto Staking Platform 2021 List
Many cryptocurrency exchanges have now incorporated the crypto staking feature into their offerings. In 2021, several platforms now exist that allow investors to earn interests and rewards from staking their crypto assets. The top 5 crypto staking platforms in 2021 are:
- eToro – Overall Best Crypto Staking Platform in 2021
- Coinbase – Most User Friendly Crypto Staking Platform
- Kraken – Top Crypto and Fiat Staking Platform
- KuCoin – Best Crypto Staking Platform for Soft Staking
- Poloniex – Most Efficient Crypto Staking Platform
Best Crypto Staking Platforms Reviewed
Having gone through a summary of the general capabilities of each of the best crypto staking platforms, let look away from their features as exchange platforms. The goal today is to find out which of these are the best crypto staking platforms and why. We have reviewed each of these platforms and tested out their crypto staking mechanisms so you don’t have to. Here is what we found:
1. eToro — Overall Best Crypto Staking Platform in 2021
As mentioned earlier, eToro is by far the most versatile of all the crypto trading platforms on this list. And it tops the list of the best crypto staking platforms for good reason. As opposed to other platforms that restrict their transactions to just cryptocurrencies, eToro allows users to trade and exchange several different financial assets. However, we will focus on just how well eToro performs as a crypto staking platform in 2021.
The message on the crypto staking section of eToro’s website is clear: “eToro Staking: Grow Your Crypto While You HODL”. So this means that users can earn interest on their cryptocurrency holdings without having to do anything! There is only one requirement. That a user who is trying to earn from crypto staking on eToro does not withdraw or trade their investments. If they successfully HODL, they will be rewarded with more of the held cryptocurrency after a specified period of time.
The entire crypto staking process is automated and the entire process is executed by eToro’s systems on behalf of the investor. eToro does a very good of simplifying the staking process for every investor. Payments are made monthly in the supported cryptocurrency asset and eToro executes the staking process on behalf of the investor.
eToro goes an extra step further and protects users’ assets from exposure to additional risks. eToro takes a small percentage of the asset’s yield as a fee in return for its services. This fee serves as payment to eToro for its services to users and serves as a way of funding several operational, technical, and legal costs.
A read-through of the crypto staking section of the official eToro website will reveal to you that eToro has a finite number of cryptocurrencies from which you can choose to stake. The most popular options that the site offers are Cardano (ADA), Tron (TRX), and Ethereum (ETH).
Depending on your membership level (Bronze, Silver, Gold, Platinum, Diamond, and Platinum+), the percentage of your reward that you get to keep may range from 75% to 90%. Users who choose to stake Tron (TRX) must first have their coins in a 7-day staking intro before they can begin earning rewards on the eighth day. For users who opt to stake ADA coins, the staking intro lasts nine days and rewards start on the tenth day of holding.
Your capital is at risk.
2. Coinbase — Most User-Friendly Crypto Staking Platform
Coinbase is the top-rated exclusively crypto-based platform for crypto staking. While the Coinbase website promises users up to a 5% Annual Percentage Rate (APR) on their holdings, the actual value varies. Investors’ returns on holdings depend on which coins they choose to invest in. For example, Coinbase offers a 2% APR on a stable coin like Dai and only 0.15% APY on the USD Coin. However, investors can earn 4% APR on Algorand, 4.63% on Tezos, and 5% on Ethereum and Cosmos.
Coinbase charges a fee on every users’ returns from staking. This is usually a small percentage of the yield that users gain from staking on the platform. Oftentimes, users may be taxed on their profits from staking. For example, investors in the United States of America are required to report the profits earned from Staking rewards. Coinbase also provides a 1099-MISC for US customers who earn more than $600 in Staking rewards. Overall, Coinbase remains one of the best crypto staking platforms.
Your capital is at risk.
3. Kraken — Top Crypto and Fiat Staking Platform
Kraken actively encourages its users to stake their holdings rather than having all their funds sitting in their Kraken account. This has proven to be very successful and many Kraken users have taken up this opportunity to a very profitable effect. In the first half of 2021 alone, more than $100 million was earned in staking rewards by Kraken customers.
To incentivise users to take advantage of its crypto staking offer, Kraken has simplified its staking process. Kraken has broken down its staking process for its users into three easy steps:
- Acquire staking assets: Kraken has an array of tokens eligible for staking which users can buy.
- Choose preferred assets: Users can select any of the available tokens that they have purchased for staking.
- Get rewarded: Kraken allows users to earn rewards on their stakings two times a week.
Kraken allows users to stake major cryptocurrencies, altcoins, stable coins, and fiat currencies. The array of cryptocurrencies available for staking on Kraken include:
- Bitcoin (BTC) — 0.25% yearly yield
- Ethereum (ETH 2) — 5% to 7% yearly yield
- Polkadot (DOT) — 12% yearly yield
- Cardano (ADA) — 4% to 6% yearly yield
- Flow (FLOW) — 4.6% yearly yield
- Solana (SOL) — 6.5% yearly yield
- Cosmos (ATOM) — 7% yearly yield
- Tezos (XTZ) — 5.5% yearly yield
- Kava (KAVA) — 20% yearly yield
- Euro (EUR) — 1.5% yearly yield
- US Dollar (USD) — 2% yearly yield
4. KuCoin — Best Crypto Staking Platform for Soft Staking
KuCoin’s crypto staking offering is built on the proof of work consensus mechanism. Users can join in on the process of validating transactions on the blockchain network. And they can earn rewards while at it. KuCoin allows users access to a safe wallet in which they can lock their funds for an extended period and earn interest on their staked holdings. On KuCoin, users can stake the following coins: Ethereum 2.0, Algorand, Icon, Cosmos, Tezos, and more.
KuCoin allows users to stake their cryptocurrencies on the platform via a mechanism called Soft Staking. With KuCoin’s soft staking feature, users can earn rewards on their holdings without actually locking up their funds. This mechanism was introduced by KuCoin in July 2019. Despite the unconventional nature of KuCoin’s crypto staking feature, it has rapidly gained popularity among over 300,000 users.
Although soft staking works differently from traditional crypto staking, it presents several benefits over conventional staking. Because soft staking doesn’t require locking up your funds, users can be rewarded every day on their holdings. Ultimately, users do not have to wait for days or months before receiving the rewards on their investments. Consequently, soft staking is faster and compounds interests more rapidly. Lastly, this equips users with greater flexibility and control over managing their stake portfolio.
5. Poloniex — Most Efficient Crypto Staking Platform
Poloniex works very similarly to KuCoin in how it runs its cryptocurrency staking mechanism. It offers a high level of flexibility for customers who wish to stake on the platform. In three quick and easy steps, customers can fund their Poloniex account, acquire assets to stake, and earn frequent rewards. Stakes on Poloniex work on a mechanism called “balance snapshots”. Poloniex takes balance snapshots every day to determine what each customer gets as a reward for staking.
All while staking, Poloniex allows users to retain the rights to trade, withdraw, and deposit funds at will. While this cuts off the need for a validator in the blockchain, it also means transactions occur faster. It also eliminates the need to wait for an “unbonding” period before withdrawing funds, as it is on other crypto staking platforms. This makes the staking type on Poloniex more of soft staking. Poloniex also offers competitive rates on its returns.
Customers can stake any of the following coins in Poloriex and reap rewards within each of the following periods:
- Tron (TRX) — Bi-weekly rewards
- WINk (WIN) — Bi-weekly rewards
- Cosmos (ATOM) — Daily rewards
- BitTorrent (BTT) — Bi-weekly rewards
What is Crypto Staking?
Staking is a relatively new trend in the crypto industry. Still, it is already generating a lot of buzz, with crypto stakers considering it a less resource-draining alternative to crypto mining. On a basic level, staking crypto has to do with setting aside and locking up an amount of a digital asset for a period of time and in exchange, receiving back more assets as a reward.
More specifically, staking crypto involves locking tokens in a proof-of-stake (PoS) blockchain and allowing them to earn back compensation. The tokens pledged in the staking process are used to help the blockchain of networks validate crypto transactions. You may have seen staking crypto compared to putting some cash into a long-term savings account and getting back some interest after a period of time. It works on a similar premise, from the user perspective.
There are two methods of staking crypto assets. The first method involves operating your own node as a validator. This method requires a ton of technical expertise and capital to carry out. The second method is much more common and involves delegating your tokens to a validator, which can be a staking-as-a-service (SaaS) platform or a crypto exchange that offers staking. The best crypto staking platform for you is one that ticks the most essential factors, such as ranking, reputation, and age.
How Does Crypto Staking Work?
To understand how staking crypto works, you must first understand what the PoS mechanism is. This protocol allows people or validators to validate block transactions depending on the number of tokens they hold. PoS is an energy-saving alternative to the PoW protocol which is used to mine Bitcoin.
To stake, validators purchase crypto assets that allow staking in a network. Staking crypto can only be carried out in networks that support the PoS mechanism. After the tokens have been purchased, they are locked up following the guidelines set by the staking network.
Crypto exchanges that provide a platform for staking offer features such as the crypto staking pool. Staking pools allow a group of token holders to join forces, combining their crypto stakes into the pool. The rewards received are shared among the stakers in the pool proportional to their stakes. Basically, a crypto staking pool is a means to exploit the principle behind staking, as they gather assets in bulk, increasing the chances of being picked to verify a block.
Mining vs. Staking
The major difference between mining and staking lies in the contrasting features of the blockchain mechanisms used in implementing them. While mining uses the proof-of-work algorithm for the validation of transactions, staking is largely dependent on proof-of-stake. They are both phenomena used for introducing and circulating new coins into the market.
Mining is most notable for its association with Bitcoin. To requires miners to solve complex mathematical problems using specialized computing hardware to add new transaction blocks to the blockchain. Several miners aim to solve the complex problems presented, but only the first miner to solve it receives the reward. The process of mining is notorious for being extremely energy-consuming.
Staking works in sharp contrast to this, based on the hardware requirements required for PoW, the elements of probability and luck involved, and the resources expended. It is similar to a fixed deposit where stakers earn defined rewards for putting up their crypto assets for defined periods of time.
Both staking and mining come with their benefits and cons or risks. However, staking is largely considered an improvement in mining. Currently, the PoS protocol forms the basis for most new crypto tokens introduced into the market.
On-Chain vs. Off-Chain Staking
On-chain staking and off-chain staking are types of staking services offered by crypto staking platforms. On one hand, on-chain staking is what is commonly regarded as staking. This process uses a blockchain PoS mechanism to generate rewards on staked crypto. In on-chain staking, your staked tokens actively participate in the validation of block transactions. This staking type is what most staking platforms and crypto exchanges offer to stakers.
On the other hand, in off-chain staking, your crypto-assets do not have to actively participate in the process of validating block transactions. Off-chain staking allows stakers to earn rewards on their idle available account balances. It does not utilize the PoS protocol.
The Top Crypto Staking Coins
When crypto staking was first introduced, there was a pretty significant limit to the number of coins that could be staked for rewards. As interest in crypto staking exploded, however, more and more coins can now be used to generate passive income for crypto holders. In no particular order, here are some of the top crypto staking coins:
Ethereum 2.0 (ETH 2.0): Ethereum operates on the PoW mechanism rather than PoS, but a transition is in the works with ETH 2.0 in the pipeline with an unconfirmed launch date set for 2022. Currently, Ethereum has a ton of validators on its PoS testnet, with ETH 2.0 staking contract becoming the largest holder of ether. When you stake ETH 2.0, you can expect to potentially earn between 5% – 6.25% on your assets.
Cardano (ADA): Cardano was founded by Charles Hoskinson, who also happens to be one of the creators of Ethereum. ADA holders can stake up to 6% returns on their crypto assets. Staking Cardano on eToro is secure and completely free of hassles.
Tron (TRX): Tron was previously an ERC token on top of Ethereum before it switched to an independent P2P network. It was created by its current CEO, Justin Sun. There are different options to staking Tron and they all come with slightly varying rewards figures.
Tezos (XTZ): Launched in 2018, Tezos’ ICO caused quite a stir with more than a $230m investment. Tezos runs on liquid proof-of-stake or LPoS. Rewards on staking XTZ range from 5% – 6%. It is considered one of the most attractive tokens to stake both because of its yearly interest and the bunch of unique and innovative features it comes with.
Benefits of Staking Crypto
Is staking crypto worth it? That certainly seems to be the case, especially if you ensure that you invest in the best crypto staking platform, eToro. We’ve captured some of the benefits that come with crypto staking:
- Crypto staking has a low entry barrier. It is not a complicated process to carry out and has a very gentle learning curve. No extensive technical knowledge is required. Basically, anyone can do it. Of course, this is not the case if you want to run a node as a validator. However, that is an uncommon route anyway. With the help of a crypto staking service, you can stake your assets in a matter of minutes.
- Staking does not require the use of high-end computing machines, unlike mining. There is no need to spend a ton of money on buying expensive hardware with formidable GPUs or ASICs to set up mining rigs. You can stake crypto with your smartphone.
- The PoS protocol used in crypto staking does not burn up a ton of resources as PoW does. It is significantly friendlier to the environment. Much less electricity consumption is required for staking when compared to mining.
- Staking is an excellent way to earn passive income without expending a lot of time and effort. Stakers earn rewards on their crypto assets while staying in control of the assets.
How to Stake Crypto on eToro
Ready to start staking but don’t know where to begin? We’ll walk you through the process of staking cryptocurrency with eToro, our #1-rated crypto staking platform for 2021:
Step 1: Create an eToro Account
The first step to stake cryptocurrency with eToro is to create a new account with the platform. Head to eToro’s website and click ‘Join Now.‘ Enter your email address along with a new user name and password, and then fill in the requested personal details like your name and address.
Your capital is at risk.
Step 2: Verify Your Identity
As part of the account registration process, eToro requires you to verify your identity to comply with government regulations. You can complete this step online by uploading a copy of your driver’s license or passport. You’ll also need to upload a proof of address, which can be a copy of a bank statement or utility bill.
Step 3: Deposit Funds
Next, you can fund your eToro account. You can make a deposit with a credit card, debit card, PayPal, Neteller, Skrill, or bank transfer. eToro requires a minimum deposit of £160.
Your capital is at risk.
Note that if you already own Tron, Cardano, or Ethereum 2.0, you can transfer those funds to eToro at any time. Just point eToro to your existing crypto wallet to make the tokens available for staking.
Step 4: Purchase Cryptocurrency
Now you can purchase buy cryptocurrencies for which eToro currently supports staking: TRX, ADA, or ETH 2.0. Simply search for the coin you want to purchase and click ‘Trade’ to open a new order form. Enter the amount you want to buy and click ‘Open Position’ to complete your order. Keep in mind you must buy at least £25 of any coin in order to be eligible for staking.
Step 5: Stake Your Coins
Staking happens automatically after you purchase a cryptocurrency that’s eligible for staking on eToro. All you need to do is hold onto your coins for the required waiting period – 8 days for Cardano, 10 days for Tron, or 5 days for Ethereum 2.0. Proceeds from staking will be deposited into your crypto wallet.
Crypto staking is a system that allows users to earn passive rewards for validating PoS blockchain transactions. If you are looking for the best staking platform to invest your crypto assets, you can do no better than eToro. A multi-asset service that provides a platform for investing in stocks and trading CFDs, eToro is also highly regarded as a crypto investment service. Users can invest in any of the staking assets that it offers – Cardano (ADA), Tron (TRX), and Ethereum 2.0 (ETH 2.0). Staking on eToro is smooth, stress-free, and secure.
When deciding what platform you should choose for your crypto staking needs, remember to first consider what you prioritise. If you prioritise flexibility, KuCoin and Poloniex remain two of the best options. If you are relatively risk-averse, these platforms may not work for you because of their soft staking mechanism. However, if your goal is to keep your investments safe from indisciplined withdrawals, we recommend eToro above all else.
Ready to start staking crypto and earning interest on your coins? Click the link below to sign up for eToro today!
Your capital is at risk.
Frequently Asked Questions about Crypto Staking
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