A Guide to Making MonA Guide to Making Money with Crypto Staking in 2021ey with Crypto Staking in 2021

2020 is viewed as a decentralized financial year (DeFi). The central role played by the new generation cryptocurrencies in the rise of DeFi is honored. As the number of miners on proof-of-work (PoW) blockchains began to gradually decline, the industry has witnessed a steady increase in the number of users using crypto staking to obtain fixed interest or farming rewards.

In fact, while Kraken's platform alone has over a billion dollars in cryptocurrency investments, Binance, Huobi and other major exchanges also have an enormous amount of cryptocurrencies. Meanwhile, total staked assets on DeFi platforms reached $ 21-23 billion in January 2021. This is real proof of the staking request.

Guide Content

What is Staking?

What Can I Stake?

Ethereum 2.0

Tezos (XTZ)

Algorand (ALGO)

Icon (ICX)

Where Can I Stake?

Stock exchanges

Cold / Special Wallets

Staking Platforms as a Service

DeFi Staking

How to Choose a Staking Platform?

How to Stake Crypto Coins

Staking in an Exchange

Staking on the Hardware Wallet

The Future of Cryptocurrency Staking

What is Staking?

Staking is an activity where a user locks or holds a cryptocurrency in a cryptocurrency wallet to participate in maintaining transactions of a Proof of Stake (PoS) based blockchain system. This event is similar to cryptocurrency mining in the sense that it rewards participating users while also helping a network reach consensus.

During staking, the right to verify transactions depends on how many tokens are "locked" in a wallet. However, just like mining on a PoW platform, stakers are encouraged to find a new block or add a transaction to a blockchain. Besides incentives, PoS blockchain platforms are scalable and have high transaction speeds.

What Can I Stake?

Thanks to the growing popularity of staking, there are tons of options for users looking to earn passive income with cryptocurrencies. We'll briefly discuss some of the largest cryptocurrencies currently offering staking rewards:

Ethereum 2.0

One of the hottest staking options is Ethereum 2.0 because Ethereum is the second most popular cryptocurrency platform to date. And if you're investing in ETH, you can essentially be one of the first validators of the system to help develop the system.

To be a shareholder in ETH 2.0, you must have a minimum of 32 ETH and an Eth1 mainnet client. You can start the process by going to the Eth2 Launch Pad.

Tezos (XTZ)

Tezos was born in June 2018 and caused a major storm as the largest initial cryptocurrency offering (ICO) with an investment of over $ 230 million. It implements a version called proof of PoS liquid (LPoS).

Tezos' local currency is called XTZ, and the staking process is called "baking". Bakers are rewarded using local cryptocurrency. Moreover, malicious bakers are punished by seizing their stakes.

To become a staker / baker in Tezos, a user must hold 8,000 XTZ tokens and run a full node. Fortunately, third-party services emerged and allowed small cryptocurrency holders to transfer small amounts of XTZ and share baking rewards. The annual percentage return on the XTZ stake ranges from five to six percent.

Algorand (ALGO)

The main purpose of Algorand (ALGO) is to direct low-cost cross-border payments. As a PoS protocol, the network needs stakers for security and transaction processing. Unlike Tezos, it uses a pure proof-of-stake (PPoS) consensus mechanism. However, it still requires stakers to run full nodes.

There are also third parties that support the ALGO delegation. Staking rewards on these networks range from five to ten percent annually. Note that the rewards are affected by the platform used. For example, those using BINANCE Staking can benefit from 8% APY (annual percentage return), while those using other platforms may have a different APY.

Icon (ICX)

The complex Korean blockchain project Icon (ICX) offers another platform that naturally allows staking. However, Icon is different from Algorand and Tezos in that it uses the delegated Proof of Stake (DPoS) consensus algorithm. With this model, a certain number of users find new blocks and validate transactions, while others transfer their money to these assets. Icon has a native token called ICX. Annual staking rewards in ICON range from six to 36 percent.

Where Can I Stake?

There are many different platforms and methods for staking:

Stock exchanges

Exchanges naturally entered the staking business thanks to the large number of users on their platforms. By staking, investors can diversify their revenue streams and monetize their idle funds on exchanges. Leading cryptocurrency exchanges that support staking include, but are not limited to:

Binance: Binance is the largest digital currency exchange by transaction volume. For this reason, many investors find themselves at the top of their lists when considering staking via trading platforms. In parallel, the Binance stake service for Ethereum 2.0 was launched in December 2020. In addition, the exchange supports DeFi staking, where it hosts cryptocurrencies such as DAI, Tether (USDT), Binance USD (BUSD), BTC, and Binance Coin (BNB).

Coinbase: COINBASE is another leading cryptocurrency exchange where you can deposit a range of cryptocurrencies. Other than ETH 2.0 staking, other coins included in Coinbase staking include ALGO and XTZ.

Cold / Special Wallets

This form of staking is also called cold staking. Stakeholders have to keep the coins at the same address because moving them breaks the lockout time and results in them losing their staking rewards as a result.

Leading offline / private cryptocurrency wallets that support staking include:

Ledger: LEDGER is the industry leader for cold wallets. The advantage of hardware wallets is that you still maintain full control of your cryptocurrencies during a staking session. Ledger allows its users to stake up to seven tokens. Some of the coins supported for staking are Tron (TRX), ATOM and ALGO.

Trust Wallet: The versatile Trust Wallet is a private wallet powered by Binance. The wallet allows users to earn a passive income by staking XTZ, ATOM, VeChain (VET), TRX, IoTeX (IOTX), ALGO, TomoChain (TOMO) and Callisto (CLO).

CoolWallet S: The first Bluetooth mobile hardware wallet, CoolWallet S offers in-app stablecoin (USDT) staking, thanks to its X-Savings feature.

Trezor: The world's oldest hardware wallet also supports staking of certain assets such as Tezos through thirty-party applications such as the EXODUS wallet.

Staking Platforms as a Service

Unlike cryptocurrency exchanges and wallets, which doubles as means of trade and storage, respectively, staking platforms as a service are dedicated to staking only. However, these platforms receive a certain percentage of the rewards earned to cover their fees. Staking is also known as soft staking on these platforms.

Stake Capital: Supports Loom Network (LOOM), KAVA, XTZ, Aion (AION), Livepeer (LPT) and Cosmos (ATOM) staking.

MyCointainer: MyCointainer users choose between Power Max, Power Plus and Basic options when staking their virtual assets. Three levels show staking fees. For example, Basic users pay as little as $ 1, those on the Power Max plan pay more than $ 10 per month. The platform hosts more than 50 cryptocurrencies with support for staking on-chain.

DeFi Staking

Some of the DeFi platforms that provide staking are as follows:

Maker (MKR): The platform allows users to borrow stablecoins against a volatile cryptocurrency like Bitcoin. Its popularity has made it one of the leading decentralized finance protocols in the Ethereum blockchain (currently number one 'TVL' in total volume locked down as of January 2021). Specifically, DAI is the network's primary stablecoin. Therefore, yield farmers deposit the DAI on loan to borrowers, while receiving rewards from interest on loans.

Synthetix (SNX): Synthetix has a local currency called SNX. As the name suggests, the platform is used to export synthetic assets commonly known as Synths. Synths are virtual assets used to represent physical and real assets such as stocks, cryptos, and fiat.

Yearn Finance (YFI): The protocol emerged as a DeFi aggregator in February 2020. Therefore, instead of facilitating lending and borrowing, it distributes the invested funds to platforms with the best returns and lower risk profiles. For example, distribute funds between Aave and Compound when it finds these two to provide the most rewarding and less risky returns.

Compound (COMP): Compound allows users to borrow or lend a small set of cryptocurrencies such as ETH, USD Coin (USDC), Basic Attention Token (BAT), Ethereum (ETH), and DAI. The platform uses lending pools and charges interest on loans. The protocol for collateral requires borrowers to deposit a certain amount of supported cryptocurrencies.

How to Choose a Staking Platform?

Before rushing to deposit your cryptocurrencies, you need to make your staking platform choices carefully. Making the wrong choice can result in losing your rewards and staking money. When choosing a staking platform, it is important to consider:

When it comes to new DeFi platforms, don't rely immediately on the protocol a founder or team is trying to promote, especially if you don't have much of a clue about the technology. Go to Reddit and Twitter and check out what others are saying about the protocol.

Don't get too caught up in annual rewards or APYs. Reputation and age of the platform 

There are many important factors to consider.

Whenever possible, instead of risking your crypto wealth on platforms that promise extremely high staking returns, you can use Maker, Cool Wallet, etc. Stay connected to reputable platforms such as.

Use reliable systems like CoinMarketCap to check information on a PoS-based platform. This also applies to staking platforms as a service and third party staking services.

Before staking, read the terms and conditions or rules that govern the staking process.

How to Stake Crypto Coins

The process of staking digital currencies depends on your staking option. For example, cold stacking is different from being a direct validator on a PoS platform. Moreover, using staking platforms as a service takes a different route than third-party or exchange-based staking methods.

Staking in an Exchange

Here we will look at how to deposit crypto using an exchange. Let's use Binance as our preferred platform and Ethereum as our cryptocurrency.

First of all, you need to have a Binance account and some ETH coins. After logging in, access Finance> Binance Earn> ETH 2.0 staking.

Note that staked ETHs have a lockout time of up to 24 months. Binance tokenizes the staked ETH and distributes the rewards in the form of BETH.

Click on “Stake Now” and specify the amount of ETH you want to allocate for staking. Click "Confirm". In the second window that opens, review the terms and conditions before clicking “Confirm” again.

Staking on the Hardware Wallet

The process of staking cryptocurrencies on a hardware wallet like Ledger is similarly simple.

The first step is to upload the cryptocurrency (eg ALGO) application to Ledger.

Create a new account on Ledger Live and move any funds you wish to deposit using Ledger Live. And you are done!

But that's not all. You can use the coins stored in your Ledger wallet, but you can manage the crypto using other wallet apps. Staking using this formula follows the same steps as above, but after step one, you choose a third-party cryptocurrency store.

After that, you need to send money from the wallet to the Ledger and start staking. Remember that the third party wallet manages your cryptocurrency.

The Future of Cryptocurrency Staking

It is clear that staking is healthier (environmentally and perhaps economically) than PoW-based mining. Therefore, the cryptocurrency industry is rightly gaining momentum and its market share is increasing. The change to staking gained new force when Ethereum finally made the change and officially welcomed staking in December 2020.

And in 2021, as DeFi staking continues to evolve, the popularity of both decentralized and centralized stakes seems to be at an all-time high.

Finally, despite the growth that fueled FOMO, the DeFi stake should be approached with caution, especially for newly created protocols, yield farming or liquidity providers promising suspiciously high rewards. It is necessary to pay attention to these.

Remember that staking cryptocurrencies comes with significant risk, so it is absolutely essential to do extensive research and invest wisely. Happy stakes!