“Digging without quarrels” is the term for betting in the crypto community.
This way of income liabilities relieves consumers of all costs and worries associated with mining: ASIC devices, cooling systems, autonomous power supply and regular electricity bills, etc. And all this against the background of declining profitability of profits: to make a profit, you need to invest more and more and there are less guarantees that the investment will pay off and bring income.
As a result, cryptocurrency holders have begun to focus their winnings (and wallets) on more profitable and less worrying ways to make money, such as betting.
Staking involves storing PoS coins in a stock exchange account and receiving a prize depending on the number of tokens stored.
Staking as an alternative to the cryptocurrency of classic bank deposits – why it is profitable and why now all major exchanges add betting to their arsenal.
We have already learned that when staking, digital asset holders delegate their coins to a staking pool to keep the network alive, for which they receive a reward. So everyone is a winner. The “easy digging” feature has begun to be actively supported by trading platforms, crypto wallets and other sites.
Popular cryptocurrency exchanges are becoming the main form of staking: they have a powerful technical base, a huge number of customers and their trust.
Binance, OKX (OKEX), BitGlobal, Kucoin and other major trading platforms offer staking services to their clients.
In the struggle to attract customers, exchanges are trying to offer better conditions than competitors. Binance has set zero staking fees for its customers. This has forced other market participants to also reduce their commissions or abandon them. And the Kucoin exchange has launched a “soft bet” that allows you to use frozen coins for trading.
Top 5 best betting exchanges and features of each in our review.
Binance staking appeared in the arsenal of the exchange in October 2019. The exchange offers fixed and DeFi staking.
Binance fixed staking:
- 24 fixed coins for staking;
- Yield (% per annum): from 1.49% for LSK to 32.79% for Dot;
- Deadline 7/15/30/60/90 days (there are different deadlines for different coins);
- The minimum amount depends on the currency;
- Payment guarantee even in the event of a market downturn;
- During the blocking period, trading and withdrawals are not available;
- The possibility to take tokens ahead of time (interest received from staking will be debited and the principal will be returned to the account).
DeFi staking on Binance:
- Interaction through smart contracts;
- Relatively high entry threshold;
- Higher profitability due to the lack of high commissions for trading;
- Easy to use: the service acts on behalf of users and buys certain DeFi products and performs transactions;
- High level of security: the best DeFi projects in the industry are selected and transactions are monitored in real time.
For a detailed overview of the OKX exchange (OKEX) read our article: Overview of the OKX exchange (OKEX).
OKX Earn are some convenient options for passive income: savings, loans, DeFi and staking. In this way, the exchange offers consumers the maximum benefits from owning digital assets.
All you need to win from staking is to lock your PoS coins in your account and receive daily payouts starting from the second day. There are currently 79+ PoS coins to bet on OKX (OKEX).
“OKEx has a huge ecosystem in which betting is one of the most important places. This way of passive income is ideal for hodlers (long-term investors): they earn not only by increasing the price of an asset, but also by increasing the size of the asset.As for traders, they rarely use betting during the period of active trading, because at this point that they can get the maximum profit. But in a period of declining market volatility or, among other things, during the New Year holidays, traders use gambling for passive income.
For example, now that you bet on Tether, you can get a profit of 6.57% per year, which is not provided by any of the CIS banks. In addition, there is no minimum OKEx betting threshold, so you can start earning passively from just $ 1.
As for me personally, I have a rather conservative view of the promising cryptocurrencies to bet on. My favorites are Bitcoin and Tether. But I always follow the market and I have such young (but promising) coins in my portfolio as Flamingo, Yearn.finance and Polkadot.”
For a detailed overview of the BitGlobal Exchange, read our article: BitGlobal Exchange Review (Bithumb Global).
South Korea’s largest stock exchange BitGlobal added staking in April 2020. There are currently 5 betting coins available: VSYS, IPX, IOST, LUNA, TRUE. The yield depends on the volume of the stored coins: for VSYS it is 8-12%, for IPX – 7.5-10.5%, etc.
At the same time, there are no restrictions on the use of coins for deposits, withdrawals and transactions.
For a detailed overview of KuCoin exchange, read our article: Overview of KuCoin exchange
Kucoin’s Pool-X is 17 coins for a permanent bet and 3 coins for a fixed bet. The profitability, terms and regularity of payments, as well as the minimum and maximum amounts depend on the specific coin.
Kucoin offers Soft staking, where stored coins can be used for trading. There are 32 Kucoin soft bet coins available. Payments are made daily.
For a detailed review of the Kraken Exchange, read our article: Review of the Kraken Exchange.
In December 2019, the Kraken Exchange joined the list of platforms that support cryptocurrency staking. The exchange offers in-chain and off-chain staking: in the first case we talk about staking using the PoS protocol, in the second, through Kraken Margin Pools.
To make money from staking, an exchange user must transfer assets from their main exchange portfolio to a special address. Then wait for confirmation that the coins have been accepted for staking and receive payments at the same address.
The rate depends on the coin (for example 6% per year for Tezos). Prizes are credited twice a week.
What is staking and how it works?
Staking is a way of passive income in which consumers keep coins of the PoS algorithm, which entitles them to participate in digging and earn.
Where does the prize for staking come from? The essence of staking is that in PoS-based blockchains the operations for processing transactions and generating new blocks are performed by special trusted validators. And the more coins stored in the validator’s wallet, the more chances he has to get the right to create the next block.
When digging PoS validators are also called counterfeiters. To become a counterfeiter, you must have a certain amount of coins in your account (depending on the requirements of a particular network). Thus, unlike PoW (Proof of Work), where transactions are confirmed by the miners with the highest hashrate, with PoS, those with the most tokens have the power.
Get a free video trading course
The staking process provides support for all blockchain operations and helps the network work, for which validators are rewarded. Blocking digital coins also protects the network from inflation: consumers do not drain their assets as soon as possible, but keep them in the account and receive passive income. And this maintains the balance of supply and demand and protects the asset from depreciation.
The crypto industry is currently moving away from volatile PoW mining and moving towards PoS. As they say in the community, the era of “green digging” is coming.
The PoS algorithm is more energy efficient and resistant to attacks.
Despite the fact that the “band leader” Bitcoin is working on the PoW algorithm and will not change anything, other projects are very much in the mood for change. Ethereum developers are now committed to the transition of the network from the PoW algorithm to PoS, and this should happen no earlier than 2021. The launch of the zero phase of Ethereum 2.0 took place on December 1, 2020.
Types of cryptocurrency staking
Roughly speaking, cryptocurrency staking works in a similar way to the way bank deposits work: the consumer deposits funds in the account and they work for themselves (or rather for him). And the more money there is in the bank, the higher the profitability. The amount of profit also depends on the time for which the bank freezes depositors’ funds: the longer the period, the higher the percentage.
When it comes to crypto staking, your unit sets its own requirements and operating conditions. For example, in the Ethereum 2.0 network, a certain bet amount for each valid one is 32 ETH.
There are different types of betting depending on the conditions: fixed, permanent and DeFi betting.
Fixed or locked staking includes a predetermined specific time during which the funds will be frozen. That is, the owner of the tokens chooses a period, such as week, month, etc. During this time, its funds will not be available for trading and withdrawal. The interest rate on fixed contracts is higher. Therefore, this type is chosen by those who want to get a higher profit.
If the consumer wants to redeem the fixed bet earlier, then the invested amount will be returned without%.
In the case of fixed or flexible cryptocurrency staking, there is no fixed date for the end of the contract: the interest “falls” until a sales order is created or the funds are withdrawn. Most often, the remuneration is accrued within one day after the start of an open-ended contract, and payments are made once every 30 days.
Constant staking is a great option for those who value asset flexibility and are not ready to freeze their capital for a long time. The coins just lie in a separate wallet and there are regular prizes for storage.
Decentralized financing (DeFi) projects involve the provision of financial services through smart contracts. They are used to generate higher annual returns for certain currencies.
A feature of DeFi staking is that you do not need to buy the assets of a specific project for decentralized lending. The betting service itself will invest them in a profitable project. But at the same time, it should be borne in mind that there is a relatively high threshold set for DeFi products.
In 2022, DeFi projects began to gain popularity. They provide access to various tools for insurance, management, forecasting, etc., but all processes take place in a decentralized infrastructure controlled by smart contracts, not intermediaries.
Yield on staking
Why are staking profits gaining popularity? First of all, because at a moderate level of risk the return on staking is higher than that of most traditional financial instruments.
How much can you earn this way? The amount of the profit can vary depending on the dynamics of the exchange rate of the coins, the stored volume and the duration of the staking contract. On average, we are talking about 6-8% per year.
In addition, cryptocurrency staking is based on other mechanisms, so it is protected from many of the risks associated with other instruments. For example, the current economic situation and other external factors do not affect payments in any way, the PoS algorithm is protected from attacks, and frequent payments minimize operational risks.
The website stakingrewards.com has a calculator for calculating the profitability of staking. Using it is simple: choose a token for storage and specify the amount. In this way you can calculate the potential daily, weekly, monthly and annual income.
This way staking on different coins will bring different percentages. You can calculate several options and choose the most profitable one. Below we will talk in detail which coins are best to choose for betting.
How to start making money by cryptocurrency staking
If you are new to the market, but you are attracted by the prospect of winning by betting, then I have good news – it is very easy to do. But to start passive income from staking, you need to be a little more active.
Three main steps to start making money by staking cryptocurrencies:
Site selection (exchange);
Selecting a PoS coin available for staking on the selected exchange;
Fill your wallet and start staking.
Some exchanges offer different types of staking: permanent, fixed, DeFi staking. You can choose the staking contract that suits you best, giving you even more freedom in managing your capital.
The best cryptocurrencies for staking
Now more and more crypto exchanges are adding a staking service and expanding the list of PoS coins. We have already talked about the importance of choosing a coin for storage, as profitability directly depends on it. Popular coins are more reliable, but bring more moderate income than unknown coins, which, once issued, can shoot and bring huge returns to owners.
We are supporters of the first scenario and when choosing a coin to bet on, we advise you to pay attention to such parameters as exchange rate volatility, trading volume, presence on major exchanges and prospects (real benefit).
TOP 5 most promising coins for staking in 2022 according to experts: PancakeSwap, Polkadot, Binance USD, EOS, TRON.
CAKE is a decentralized crypto exchange PancakeSwap token that exchanges BEP 20 tokens. The site runs on the Binance Smart Chain blockchain and uses an automatic market maker (AMM) model in which users trade against a liquidity pool. They deposit funds in the pool and in return receive tokens from a liquidity provider.
CAKE is registered on major crypto exchanges such as Binance, Huobi, Kucoin and others.
DOT is the natural token of the Polkadot decentralized scalable network. Its peculiarity is that it can process many transactions in several chains in parallel (in the so-called “para-chains”). Through parallel processing, data transfer is more efficient and faster, as well as increasing network scalability and achieving interoperability of different blockchains with each other.
The founders of Polkadot aim to create a fully decentralized private network managed by the users themselves. Owners of the DOT cryptocurrency have full control over the protocol and can add new parachutes or remove inactive ones.
BINANCE USD (BUSD)
BUSD is another stable coin pegged to the US dollar at a ratio of 1: 1, which was launched by Binance in partnership with Paxos (the company has already created PAX stablecoin).
The cryptocurrency EOS is the basis of the eponymous decentralized platform EOS with support for smart contracts, based on which various decentralized applications are created.
In essence, EOS is a complete blockchain operating system. It is characterized by the highest throughput and very effective technical solutions combined with a flexible security system. EOS builds on the experience of other successful blockchain-based products and is considered a competitor to Ethereum in its quest to become the “backbone of the new Internet”.
TRON is the cryptocurrency of gamers and all fans of the gaming industry. First of all, there are great prospects for the development of the project. TRON also offers tools that allow developers to create and run various dApps (decentralized applications). The “fuel” for the operation of the platform are TRX (Tronix) tokens.
TRON is known as the project that conducted one of the largest ICOs in the history of cryptocurrencies, during which $ 70 million was raised (September 2017).
The Tron Foundation, which created TRON, has announced the launch of its own decentralized stable coin, the percentage of which will be provided by Tron and BTT tokens.
Cryptocurrency Staking Risks
The high volatility of the crypto market makes it difficult to use digital money on a daily basis: a coin can rise as much as it can fall. Forecasting can help determine the dynamics of the exchange rate, but most often the exchange rate rises or falls as a result of a series of events that can be completely unpredictable.
Therefore, it may happen that the frozen currency simply depreciates as a result of the collapse of the exchange rate. Then there is a risk of losing the initial investment spent on purchasing storage tokens. To prevent this, you can use stable coins.
Stablecoin (stable coins) in this case have strong advantages. Thanks to an advanced stabilization mechanism, their value is maintained at a certain level, even when the price of the underlying asset decreases.
The risks of staking are also related to the choice of coin holding. Some “freeze” well-known cryptocurrencies, thus minimizing the risk of the coin slipping. Others are buying new tokens that are not yet listed on the stock exchanges and are waiting for the exchange rate to rise after launch. This is a riskier and more complex strategy for making money from cryptocurrency staking, but at the same time more profitable: an unknown coin can “shoot” and bring a high return or may not shoot. That’s why you need to choose a betting coin very carefully.
Advantages and disadvantages
- “Digging without a hassle”: an easy way to earn passive income;
- Minimum costs;
- No georeferencing;
- It does not require knowledge and experience (the main thing is to choose the right exchange and coin);
- Moderate risks;
- Guaranteed profitability;
- Low threshold amounts;
- Large selection of sites with support for staking;
- Different types of staking by storage periods: permanent and fixed;
- DeFi staking with higher returns;
- Variety of coins available for staking;
- Easy start: you just need to fill the wallet with the selected PoS coin;
- Ability to calculate approximate profits using the profitability calculator;
- No risk of non-return of invested funds (cryptocurrency remains in the user’s wallet);
- The current economic situation and other external factors do not affect payments;
- Resistance to attacks of the PoS algorithm: the probability of an attack of 51% is minimized;
- Environmental friendliness
- Frozen assets cannot be used for trading or withdrawn (exchanges apply “soft staking” when trading is allowed);
- Moderate return;
- The complexity of forecasting;
- Reduced circulation of coins;
- Threat to decentralization of the network: concentration of large capital in one platform.
Cryptocurrency staking is a new trend in the crypto market. This way of making money from cryptocurrency has advantages over digging: you do not need to buy special equipment, pay for electricity, have certain knowledge and training.
You just need to block the coins in a separate wallet on the stock exchange and start receiving dividends after a certain time. Another issue is to get the right coins on the right stock market to earn more and risk less. You already know which exchanges and coins to use for cryptocurrency staking.
In addition, when you bet, the cryptocurrency stays in your wallet at all times, which protects against the risk of no return. Unless you write off the interest accrued for staking, if you decide to unlock the funds early. In this way, staking allows you to freely manage your capital without fear of losing money, and frequent payments minimize operational risks.
You can start staking as soon as you read the article and after a certain time (depending on the conditions of a particular exchange and the type of staking contract) the first money earned from cryptocurrency staking will appear on your balance.
Want to learn more? Check the latest news about crypto and blockchain.