What Is CryptoCurrency Staking?
All blockchains have one thing in common: transactions need to get validated.
For example, Bitcoin and many other cryptos do this through mining, basically confirming transactions and establishing Proof-of-Work. However mining uses a lot of computing power… and electricity…so the returns are constantly diminishing, and there’s little value in it for small scale operators.
Proof-of-Stake is an alternative consensus mechanism, that gives currency holders the ability to vote on whether individual transactions should be validated… and they generate income for their efforts.
There are a lot of different models and variations on the process, but the general outcome is the same… the coinholder receives a dividend for making their own funds available, kind of like how a fiat invests earns interest for leaving their money in the bank.
The way these PoS mechanisms work means that some action is required on the part of the coinholder, so a popular alternative is the Delegated Proof of Stake (DPoS) system, where the coinholder delegates their vote to a third party, who does the work on behalf of the group and then redistributes the group earnings back to the coinholders.
In a ways it’s quite similar to the ‘cloud mining‘ operators who accept deposits and then do the work on behalf of their stakeholders… and then redistribute the profits after taking a commission for their efforts.
3 Ways To Get Started Staking
If you’re already holding any POS cryptocurrencies, then earning dividends is as easy as moving them to a Staking Wallet.
A lot of currencies have their own specific staking wallet, so one approach is to register for each individual currency/wallet and move some funds into it to start earning. You generally need to leave the wallet open to earn, so this can become a bit complicated.
For me, the smarter approach is pooled staking…using one or two platforms to stake multiple currencies. You might pay a little more in fees, but it keeps it simple and lets you diversify and cover a much wider range of currencies.
Simple Staking With Binance:
Binance is now the worlds biggest cryptocurrency exchange and they recently added a staking feature which lets you find profitable PoS coins quickly and easily.
Just login to your account, or create a new one here, then click on Earn => Stake and follow the prompts.You’ll find they offer staking for 17 cryptos, and getting started is as easy as depositing or buying the crypto.
If you aren’t holding any of the listed PoS currencies, then the easy option will generally be to purchase some and have them deposited directly into the staking wallet.
One particularly useful feature of the Binance staking system is their Estimated Annual Returns info, which will let you see at a glance which cryptos are currently performing best. You’ll usually find there are several showing double-digit returns, which is pretty good value these days.
Double-Up Pooled Staking Mining With Pool-X
The Pool-X approach is a bit more complicated… and still in it’s early development… but the potential here is huge. They are developing a platform that will let users like you and me take part in a combination pool that is performing both staking and mining tasks. As such the returns could be significantly higher.
So far they are only offering 4 coins, so your options are limited in that regard, but no doubt many more will be added as the project evolves. As a new project they are also rewarding users for spreading the word, so you can currently increase your returns by sharing your referral link.
If you’re keen to get in early on something that could be quite ground-breaking… and profitable… be sure to check out Coin-X here, register a free account and consider making a small purchase on one or more of the staking/mining cryptos on offer.
KuCoin Daily Returns on 20+ Cryptos
The final recommendation is KuCoin, who offer the widest selection of staking cryptos, along with their own set of features and benefits for using their exchange and their staking service.
If you’re serious about crypto staking, it is worth registering with KuCoin as well, so you can quickly compare the annualised returns for a given currency, and choose the best deal when you’re investing.
If you do sign up here, make sure you login regularly to check the available bonus offers… these vary, but generally give you a simple task to complete to earn a small holding of a new cryptos KuCoin has added to their exchange.
7 Most Profitable PoS Altcoins To Stake Going Into 2020
Algorand (ALGO) – This is one of the best returns at present… 16-20% annualised, plus if you purchase/deposit on Binance, you’ll automatically be included in their ALGO Airdrop program. Highly recommended!
Energi (NRG) – This offers another excellent annual return rate of 12-14%… which is very attractive in an era of super-low interest rates. The coin itself is an excellent buy in it’s own right, with very good prospects for the next 12 months or so, so purchasing a stake quantity via the KuCoin exchange is a good option.
TEZOS (XTZ) – Stake this one on Binance with zero fees for an approx return of 6.8%. Tezos was the first PoS crypto to be accepted by all major exchanges for staking, and is one of the most consistent earners. If you’re putting together staking portfolio, make sure you have a good portion of your assets in this one.
V Systems (VSYS) – this is another ultra low-cost crypto worth holding even before you consider the staking returns. So as this one appreciates over the coming year, your returns will be considerably higher than the annualised 13% staking return. Purchase some VSYS on KuCoin.
Loom Network (LOOM) – this low-cost crypto is an Ethereum sidechain focusing on the gaming sector with very promising results. The generous pool return of 6% is pretty handy… especially if the price manages to work it’s way back to previous highs.
If you’re prepared to do a little more work setting it up, you can increase that annual return to 17% by staking your LOOM in a suitable desktop wallet. This is one of the best returns I’ve seen, which makes this is pretty good option to explore that approach. (Here’s a step by step tutorial that will explain the process).
Kava (KAVA) – this crypto is developing a decentralised platform for managing financial assets and used a custom PoS platform to speed transactions. It’s a low cost crypto whose price has been remarkably stable to date, making it a valuable addition to any staking portfolio. You can lock-in a 14-16% return on Binance with zero fees using this link.
DASH is another pioneer of the PoS consensus mechanism. It’s built on the Bitcoin core with additional privacy features and quicker transaction capabilities. DASH offers a generous 7.5% return, but you do need a minimum of 1000 DASH to participate and you need to do stake it in a dedicated wallet.
So this won’t suit most people, but if you did get in early on DASH and have sufficient holdings, it’s definitely worth considering. You can grab a DASH Desktop Staking Wallet here.