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Best staking coins in 2022
In this guide, find out everything you need to know about the top 5 staking coins on the market. We go through their best features, give you an idea of the expected annual return on investment (ROI), and provide links to helpful learning resources. In addition, we delve explore the pros and cons of staking, giving you a clear overview of the sector.
What are staking coins and why are they so important?
Staking itself is the process of putting your cryptocurrency tokens to work in order to earn interest/yield. To fully understand what staking coins are, you first need to understand what a consensus mechanism is. This is a technical process designed by the developers of a blockchain that allows for transactions to occur without the need for a central authority to oversee things, like a bank.
While some cryptocurrencies use a proof-of-work (PoW) consensus and task miners with validating transactions to receive coins, blockchains that employ a proof-of-stake (PoS) mechanism use staking to confirm transactions and ‘forge’ new coins.
So, anytime you invest in a coin that runs on a PoS network, you can stake them. All you have to do is place your funds in a cryptocurrency wallet so they can be used in the validation process, and you will earn interest on your crypto. Moreover, some cryptocurrency exchanges – such as Coinbase, Binance and KuCoin – allow you to stake coins directly from your account. Fundamentally, staking coins are important because, without them, PoS blockchains would be unable to operate.
How and where can I buy staking coins now?
If you are looking for the best places to buy staking coins, look no further than the options we have provided below. These platforms offer low-fee, fast and simple access to a diverse range of cryptocurrencies. Click on one of the links to sign up, or keep scrolling to learn more.
5 Easy Steps to buy staking coins
The process of purchasing staking coins is quick and simple, so don’t worry, even if you’re new to crypto investing. These are the steps to follow in order to complete your investment:
- Choose an exchange. Cryptocurrency exchanges are effectively giant marketplaces where users can swap tokens, and they are the easiest and most affordable places to obtain cryptocurrencies. Make sure you choose one with a good fee structure and a wide variety of supported coins.
- Create an account. Now you have selected the exchange you want to use, create an account by filling out some basic contact details and sending over a copy of your photo ID if this is needed.
- Deposit funds. You need funds in your account before you purchase any cryptocurrencies. To do this, connect a support cryptocurrency wallet, or for some exchanges, you can add fiat currency like GBP, EUR and USD via a bank transfer.
- Purchase staking coins. Now, search for the ticker of the staking coin you want to purchase. So, if you want to get some Polkadot, type DOT into the search tab.
- Execute your order. Finally, enter the number of staking tokens you want to purchase, check you are happy with the price and incurred fees, then execute the transaction. Your new staking coins should be added into your account almost instantly depending on the type of order you have opted for.
Top 5 staking coins to invest in
Our analysts have been hard at work delving into the staking coin market and researching what each project has to offer. You can find their final top 5 in the table below. Click on the coin’s symbol to see any relevant price information, and scroll down to find out more details about each one.
|#||Coin symbol||Coin name|
1. Polkadot (DOT)
Polkadot was created in 2016 by the co-founder of Ethereum, Dr. Gavin Wood. It is a project that aims to solve a number of the problems that have prevented blockchain technology from being adopted by the mainstream. The coin uses multi-chain technology and a PoS consensus mechanism to produce scalable results.
The minimum stake to start earning rewards is 40 DOT tokens, and given the current price of Polkadot, this gives it a moderate level of entry for stakers. However, it is important to note that if you want to create a validator node, your contribution will need to be a much more substantial 350 DOT.
The current annual yield for Polkadot is well over 10%, making it a good option for those looking to earn passive income. Moreover, you can stake Polkadot in a variety of ways, including on Kraken, Binance, and through a Fearless Wallet. Crucially, DOT is also consistently a top-10 coin and has historically risen in price. The combination of high yield, the strong fundamental value of Polkadot’s technology, and stable price accretion has landed DOT the top spot on our list.
To learn more, check out our guide about investing in Polkadot.
2. Terra (LUNA)
Officially launched in April 2019, Terra is a blockchain project that lets users create stablecoins pegged to fiat currencies. TerraUSD (UST) is an algorithmic stablecoin that is pegged to the US Dollar by the LUNA token.
With LUNA, the annual staking yield is well over 10%, providing LUNA stakers with good levels of passive income. Moreover, Terra’s ability to power stable-price global payments could aid global blockchain adoption, allowing cryptocurrencies to be used easily in everyday transactions.
While the high level of yield and strong central concept are both major reasons that Terra is on our list, it is the impressive price appreciation of the LUNA token that seals the deal.
You can find out more in our guide about investing in Luna.
3. Tezos (XTZ)
Tezos is a crypto project that raised a whopping $232 million during ICO funding in 2017, and later launched in June 2018. These days, it is a renowned top-50 blockchain that aims to compete with projects like Ethereum while handling upgrades and developments without the need for any hard forks. The project also has an added emphasis on security tokens.
When you stake Tezos’ native token, XTZ, you become a ‘baker.’ Annual rewards typically range between 7% and 11%, and your initial reward payments will be credited to you after a period of 35-40 days.
The vast and loyal Tezos community – exemplified by the platform’s social media presence and fundraising success – along with the consistently strong returns are the main reasons it is on our list.
Find out more about investing in Tezos by reading our guide.
4. Cosmos (ATOM)
Launched in March 2019, Cosmos is an interesting project that refers to itself as the internet of blockchains. It allows up-and-coming crypto startups to easily create and provide their own blockchain services. The clear focus here is bridging blockchains and creating seamless interoperability, making cryptocurrency a more viable solution to problems in the realm of traditional finance (TradFi).
The sort of yield you can expect when staking ATOM can fluctuate heavily, though it is generally around the 8% figure. Given the relative stability of this top-50 coin, this figure is solid given substantial depreciation is less likely than for many other cryptos.
Blockchain technology is currently very separated, and for adoption to truly take place, blockchains need to start working together. It is this crucial concept along with the impressive level of passive income generation that earns Cosmos a spot on our list.
Make sure you read our Cosmos investing guide to learn more.
5. Hydra (HYDRA)
Having launched in late 2020, Hydra has quickly become a frequently discussed project in the crypto staking community. It is perhaps the most unique coin on our list because it combines both deflationary and inflationary mechanics. It is an intriguing dynamic, and it means Hydra is able to burn nearly 100% of its transaction fees while also providing inflationary block rewards. This means token holders are better insulated from price degradation.
You can stake HYRDA provided you have at least 10 coins in your wallet, and early stakers will receive an enormous ROI of 60%. While this will eventually reduce down to around 20%, Hydra remains one of the most lucrative staking coins on the market. These rewards are generated from transaction fees, with any new coins being issued directly by the Hyrda blockchain.
It is the sheer scale of the returns on offer that makes Hydra a surefire inclusion in our top 5. While it is much further down the market cap rankings than any other coin on our list, its yield allows it to stand out from the competition.
Before investing in staking coins
Below, we have outlined the main advantages and disadvantages of investing in staking tokens.
- A good way of generating consistent, passive interest on your crypto savings
- The process of staking is extremely simple, even for crypto novices
- Staking is far more environmentally friendly than crypto mining
- You don’t need any expensive extra equipment to stake, unlike with crypto mining
- Staking makes PoS blockchains more efficient and secure
- No lending risk because you only lease tokens and retain full ownership of them
Benefits of investing in staking coins
The benefits of staking coins are numerous. Chiefly, you can’t lose money from the staking process itself, since you retain full ownership of your tokens and are simply leasing them for validation purposes. This gives staking coins more fundamental than coins without this facility, and given how simple the process is, it is almost impossible for things to go wrong unless you lock your coins up at the wrong time and suffer the consequences of unexpected price action.
It is also crucial to consider that the ROI for crypto staking commonly exceeds anything you would find in the realm of TradFi, including ISAs and real estate. Given that downside risks are only a little higher than with standard crypto investing, these potential rewards are impressive.
The other major benefits that staking has are its superiority in certain respects to mining. You won’t be forking out vast sums of money on computer processing power and ventilation equipment, and staking has the added benefit of being more environmentally friendly. This is not only a benefit from a moral standpoint; given the rising importance of the ESG narrative, national governments and institutional investors are under more pressure to invest in green projects, giving staking coins a real advantage.
Risks of investing in staking coins
The main risk of investing in staking coins is that your capital is locked up for a set period of time. This means that if a price surge occurs, you will be unable to sell, and if a price crash happens, you will be unable to act accordingly. In addition, staking requires you to hold tokens for the long term, so if you are a trader, it is far from ideal.
If you are planning on staking your crypto from a wallet, this will need to be connected to the internet 24/7 unless you opt to turn on cold staking. This can be expensive because of power consumption, and it can also present issues if you ever lose your internet connection.
Other than depreciation and the potential need for a permanent internet connection, staking doesn’t have any additional risks to those that come as standard when investing in crypto.
How can I find the best staking prospects?
If you are looking for the best staking prospects, the key things you need to be looking at are the expected ROI – which is presented as a percentage – and the coin’s level of volatility.
By looking for a coin with the best ROI, you can maximise your returns. Then, by using technical analysis to review a coin’s price action, you can work out whether or not it is a good time to stake it, and if it is likely to have depreciated when you come to sell it.
Ideally, you want a coin with a stable price and a consistent, strong level of yield. As a result, you may want to avoid highly volatile coins, coins that have recently undergone significant price accretion, or coins with substantially rising trading volume.
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A staking coin is a cryptocurrency that runs on a PoS blockchain and can be used in the validation process, securing the blockchain and providing returns to the token holder.
Our analysts settled on their list by extensively researching all of the top projects, reading their white papers and analysing their recent price action and expected yield.
Yes, because you are not relinquishing ownership of your digital assets. The only real risk is that by locking your crypto into a staking process, you can leave yourself exposed and vulnerable to price action.
In the majority of jurisdictions, yes. However, it is important to check the rules in your country before getting involved.
Typically, yes. They have strong fundamental value because of their ability to produce passive income, and their prices are often more stable than other cryptoassets.
Check out our cryptocurrency courses to learn more about all things crypto.
Fact-checking & references
Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.
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