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How to Stake Crypto & Best Coins to Stake

Several cryptocurrency exchanges now offer crypto staking services, enabling investors on their platforms to generate passive income from their coins, simply by holding them and being paid a set annual percentage yield (APY).
How to Stake Crypto
How to Stake Crypto

Decentralized finance (DeFi) has witnessed exponential growth in the last two years. Of all the activities performed in the sector, staking has remained one of the foremost. As of Q2 2021, the amount of staked assets had risen to $171 billion, with crypto staking rewards outperforming the interest offered by bank savings accounts.

As the crypto markets are setting new all-time highs, investors in cryptocurrency are looking to diversify into new ways to increase their holdings and earn crypto passive income, as an alternative to trading.

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    How to Stake Crypto – Quick Guide

    1. Choose an exchange that offers staking – we recommend eToro as it’s FCA, ASIC and CySEC regulated
    2. Create and verify a free account
    3. Deposit funds via bank transfer, Paypal, credit card, or other payment methods
    4. Buy Ethereum, Cardano or Tron – these coins can be staked on eToro
    5. Hold any of those supported staking coins in your eToro wallet
    6. Staking rewards are distributed each month automatically, paid in ETH, ADA or TRX

    Best Crypto Staking Platform in December 2021

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    Compare Crypto Brokers & Exchanges

    As well as eToro, you can stake crypto on ByBit, Binance, KuCoin, Coinbase and Bitfinex.

    eToro
    Stake Crypto

    68% of retail CFD accounts lose money.

    Bybit
    Stake Crypto

    The price and value of any investment in digital asset products can fluctuate.

    Binance
    Stake Crypto

    As with any asset, the values of digital currencies may fluctuate significantly.

    KuCoin
    Stake Crypto

    The traded price of digital tokens can fluctuate greatly within a short period of time.

    Coinbase
    Stake Crypto

    The value of digital currencies can go up or down frequently.

    Bitfinex
    Stake Crypto

    Market prices for digital tokens can be volatile and highly unpredictable.

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    1282234335010
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    £19.91N/A£22.12£22.01£22.13N/A
    Cardano
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    USD Coin
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    What is Crypto Staking?

    Crypto staking is the process of locking your coins on a platform and earning interest on it over time.

    Staking is the central premise of the fledgling proof of stake (PoS) technology, which many blockchains are now adopting. With PoS, participants lock (or “stake”) their coins on a protocol. Stakers are regarded as validators on the blockchain.

    Your annual percentage yield (APY) will be proportional to the amount of money you have in the staking pool – the more coins you stake, the more you earn. Staking has grown in popularity, with many projects seeing high returns.

    The Ethereum 2.0 staking contract is currently the single largest holder of ETH tokens, with over 7.16M Ether tokens valued at $21.7 billion, at press time.

    In this crypto staking guide we’ll review some of the best crypto staking platforms to earn crypto passive income on.

    Compare Crypto Staking Platforms – Top 3 List

    eToro staking

    1. eToro

    eToro is a popular exchange among cryptocurrency enthusiasts. While it predates cryptocurrency and started as a stock trading app in 2007, it quickly expanded to become an industry-leading versatile FinTech platform, supporting multiple asset classes, including cryptos. It recently hit a milestone of 20 million users in 2021.

    Known as eToro Staking, its crypto staking service allows you to lock your coins and earn rewards. Customers who stake with eToro get their payouts deposited in their wallets monthly.

    eToro exchangeeToro staking currently supports crypto staking in Ether (ETH), Cardano (ADA), and TRON (TRX). Cardano’s ADA is the most staked cryptocurrency with over $60 billion locked in value, per data from StakingRewards.

    There are nine staking intro days before rewards are calculated for ADA. While TRX has seven staking intro days.

    eToro pays a reward percentage of the monthly staking yield based on the tier system of the eToro membership Club. Investors can earn between 75-90% of the monthly yield.

    This tier system varies from Silver, Bronze, Diamond, and Platinum membership. Platinum membership is the highest tier. These members get 90% of the monthly staked yield of their assets.

    When you sign up for eToro Staking, you will get a daily snapshot of your holdings so you can track your performance. Your returns are deposited at the end of the month in the same currency that was staked. eToro staking is currently open to users in the United States, United Kingdom, and Europe.

    Visit eToro

    Your capital is at risk.

    Binance Earn

    2. Binance

    Binance is the world’s leading cryptocurrency exchange, with billions in assets being traded daily. Binance offers exposure to some of the largest crypto assets like Bitcoin, Ethereum, and several others. It also provides crypto staking services.

    Using its ‘Binance Earn’ crypto staking service, Binance allows you to earn interest on the staking coins you have in your wallet. The service has three staking options, namely locked staking, DeFi staking, and ETH 2.0 staking.

    Binance exchangeLocked staking allows you to hold your coins for a pre-fixed period, between a week to three months. Funds are stored in your wallet, and you can withdraw whenever you want – although at a cost.

    Binance’s DeFi staking is focused on DeFi projects.  Although they are considered the best coins to stake in terms of generating higher yields than locked staking, they are inherently riskier. ETH 2.0 Staking is the third option. ETH 2.0 allows you to earn staking rewards by supporting the Ethereum 2.0 network from your Binance wallet.

    Binance doesn’t charge staking fees when you use Binance Earn. But that might change soon. You can stake 69 assets on the exchange, as well as five flexible DeFi staking assets. These include Filecoin (FIL), Shiba Inu (SHIB), AOL, Kusama (KSM), and the Binance Coin (BNB).

    Your staking reward will vary on Binance, based on the asset staked, staking coins amount, and lock-up period.

    Visit Binance

    Coinbase Staking

    3. Coinbase

    Coinbase is a US-based and leading exchange that emerged in 2021. The crypto platform provides crypto trading services and staking services across different PoS pools.

    To enjoy the staking service on Coinbase, users have to verify their identity with a valid TIN and reside in a location where staking is allowed.

    CoinbaseCoinbase allows users to stake on the following assets: DAI, USDC, Cosmos (ATOM), Tezos (XTZ), Algorand (ALGO) and largest altcoin Ethereum with an APR of 5%. Coinbase launched the pool for Eth2.0 staking in April 2021. 

    Unlike Binance, the pools available for staking on Coinbase are limited. Coinbase charges a commission for staking tokens on behalf of its users.

    Additionally, because Coinbase is US-based, US users are taxed on staking rewards as long as they are above $600, as provided by the 1099-MISC tax policy. 

    Visit Coinbase

    Best Coins to Stake

    Currently, there are thousands of staking pools distributed across various platforms. DeFi enthusiasts look out for pools with either high annual percentage returns (APR) or annual percentage yields (APY). Additionally, they try to stake assets with good fundamentals and room to grow in market valuation. 

    Below is a list of some of the best coins to stake and the crypto staking rewards they can yield.

    Ethereum 

    Ethereum (ETH) has remained the second-biggest cryptocurrency behind Bitcoin and the largest altcoin in the history of digital currencies. Since Ethereum is switching to Proof-of-Stake consensus- also known as Ethereum 2.0- from the PoW model come 2022, Ether the native token has become a stakeable asset. 

    This is currently one of the highest-ranking assets to stake in decentralized finance. Beyond this, it will be beneficial to be one of the early validators for ETH 2.0. 

    The Ether staking pool which can be found on Eth2 LaunchPad is offering an annual yield rate of 6.8% to users. Those who participate can make crypto passive income before the transition to the PoS model is complete. 

    Ethereum’s rival, Bitcoin cannot be staked because its blockchain still runs on the proof-of-work consensus which takes into account only physical input from miners before transactions are validated. As such, Bitcoin is only available for mining. Alternatively, users can stake the wrapped (ERC20) version of Bitcoin on other pools accessible through DeFi protocols such as Aave, Compound.

    Cardano 

    Crypto Staking

    The native token of the largest proof-of-stake blockchain, Cardano (ADA) has a staking utility.

    Cardano has the highest staking rate among other cryptocurrencies with staking functionality, with 71.7% of the tokens locked in various staking pools. 

    ADA has an average yield rate of 4.6%. Cardano recently attained smart contract status, which provides more utility for its native token since many smart contracts will be launched with ADA being used to offset transaction fees. This will give the price of the token more value such that rewards earned for staking ADA will be more valuable.

    Polkadot 

    With the promise of being a blockchain designed to address the challenges of scalability and speed on other blockchains, Polkadot (DOT) has grown to become a favorite among investors. Its native token $DOT is now capable of being locked up in staking pools. $DOT has an average yield rate of 14%. 

    Users can stake their tokens for as long as they prefer while they partake in the transaction validation process and earn valuable rewards for doing so. The price of $DOT has also been making new all time highs in 2021 in anticipation of its launch of parachains. 

    Solana 

    Solana (SOL) is regarded as an Ethereum rival and the proof-of-stake blockchain has not failed to live up to the expectation, being one the best performing altcoins of 2021.

    $SOL, Solana’s native token is another great asset to look out for. With an average yield rate of 7.4%, users are sure to enjoy lots of rewards. SOL can be staked on Phantom wallet.

    Tron

    Tron (TRX) was a popular altcoin during the 2017 crypto bull run, developed and promoted by Justin Sun. It still has a loyal community of investors and has stood the test of time, having a large marketcap in 2021.

    As with Ethereum and Cardano, Tron can be staked on crypto staking platform eToro.

    Stake Crypto on eToro

    Your capital is at risk.

    Staking Stablecoins 

    Stablecoins are considering by more conservative investors to be the best coins to stake as they are less volatile, meaning they are not subject to sudden market fluctuations, unlike other crypto assets. One reason for this is that they are pegged to fiat currencies which give them adequate backing provided there is a reserve.

    Your principal is more guaranteed and the returns more predictable. Below are some stablecoins you could stake as well as platforms that enable stablecoins staking and yield rates:

    • USDC – this stablecoin is issued by Circle and is pegged to fiat dollars on a 1:1 benchmark. Binance offers 3.49%, Coinbase 0.15% and OKex 3.23%.
    • BUSD – issued by leading crypto exchange Binance. Users earn 3.59% annually for staking BUSD on Binance.
    • DAI – another stablecoin pegged to the US dollar and issued by decentralized protocol and autonomous organization MakerDAO. DAI has a circulating supply of 6.4 billion, however, the token’s supply is not known. 

    The disadvantage of staking stablecoins is of course that they don’t rise in value, they remain stable – whereas when you buy Ethereum and stake it you can earn income in two ways, both from the rise in the price of ETH, and from the crypto passive income.

    How to Stake Crypto – Best Methods

    There are several ways how to stake crypto assets – DeFi staking, using staking-as-a-service platforms, staking on an exchange, and even on Hardware wallets.

    DeFi Staking 

    Decentralized finance advocates for users being in control of their funds, eliminating the role of a third party or an intermediary. This is the concept behind DeFi staking such that users act as validators and help secure the network just like miners do on PoW-enabled blockchains.

    More often than not, to run a node as a validator often comes with steep requirements. For instance, the minimum stake of 32 ETH required to run a node on ETH 2.0 is relatively high. Alternatively, you can opt for pools on decentralized exchanges such as Pancakeswap or Uniswap.

    In most cases, there is no minimum stake stipulated in these pools. This creates an opportunity for free entry and exit such that users can stake and stake at any time. 

    In DeFi staking, you can earn passive income on your tokens via two means, namely liquidity mining and yield farming. With liquidity mining, stakers provide liquidity on a pool and are rewarded with transaction fees spent by other users of the pool. 

    Tokens are often paired on liquidity pools (LPs). For example, you could have a pool with Binance Coin (BNB) and Axie Infinity Shards (AXS) paired together. Users who prefer to stake in this pool have to use equal amounts of BNB and AXS tokens. 

    Staking-as-a-Service Platforms 

    Staking-as-a-Service platforms are focused on providing crypto staking. Using these platforms, you are delegating your assets while they maintain a node as a validator on your behalf. Delegating your assets to them is not handing over custody – you are still in control of your assets and allowed to ‘undelegate’ them whenever you wish.

    While they run the nodes and handle other technicalities involved, they charge commissions on your rewards. This is like their rewards for the service rendered. Staking with SaaS platforms is also known as soft staking.

    Several platforms offer staking services and they do so across different pools. Only a few have been able to resonate with staking enthusiasts.

    Staking on Hardware Wallets

    Staking through this means is known as cold Staking. Investors who prefer this medium have to keep their PoS tokens staked in one address. Otherwise, moving them out of that address will cause them to lose their staking rewards.

    Hardware wallets are recognized for their security since they are not connected to the internet. Still, to access them, you would need a private key known to only the owners of such wallets. Many hardware wallets support staking. 

    • Ledger

    This is a leading wallet in the crypto industry in terms of security. It usually comes in two versions: the Ledger Nano S and X. Staking is supported on the Ledger wallet and users are in total control of their funds. 

    Ledger supports the staking of up to seven coins including Tron (TRX) and ALGO.

    • Trezor

    This is the oldest wallet and it supports the staking of assets like Tezos (XTZ) through third-party software.

    • CoolWallet

    This is a Bluetooth-powered wallet and allows users to stake stablecoin USDT via its in-app X-Savings feature.

    Staking on Exchanges

    eToro exchange makes things simple for its customers and offers automatic staking rewards on its platform. There’s no need to set up your own node or purchase any special equipment.

    Staking on eToro is simple, hassle-free and secure. Rewards are automatically paid out to users monthly by eToro. eToro reserves a small percentage of yields as the fee for operational costs and other incurred costs.

    eToro is committed to making staking a highly rewarding process for its users by reducing the risks involved. The exchange supports some of the best coins to stake such as Cardano (ADA), Tron (TRX) and Ether (ETH). Monthly yields on the three assets vary based on membership. There are Bronze, Silver, Gold, Platinum and Diamond members.

    How to Stake Crypto on eToro Step-by-Step

    Step 1 – Open an Account

    Follow the links on this page to the eToro website on Windows or Mac and click ‘get started’ on the homepage to create a free account. You’ll be prompted to choose a username, enter your email and create a secure password. Alternatively you can signup with Facebook or Google Plus.

    If you’d prefer to use the mobile app for iOS and Android, read our guide to the eToro app with screenshots.

    eToro create account

    eToro website homepage

    Step 2 – Search for Staking Coins

    Once you’ve opened your free account, you can find investment assets in the top search box and create a watchlist. eToro currently supports these staking coins – Ethereum, Cardano and Tron.

    Type the name of the coin you’d like to stake in the search box.

    eToro ethereum

    Ethereum (ETH) on eToro

    Step 3 – Buy Ethereum

    To test out the eToro sofware, you can buy Ethereum using your demo account – select the amount of virtual currency to buy Ethereum with, and click ‘open trade’. The current price of Ethereum will be displayed and its percentage gains on the day.

    Once you’re ready to purchase Ethereum and hold the underlying asset, deposit funds into your eToro account using bank transfer, Paypal, credit card, or any of the other payment methods, then repeat the process.

    You can stake multiple coins at the same time by adding several of ETH, ADA and TRX to your portfolio.

    Buy Ethereum eToro

    Opening a trade on eToro 

    Step 4 – Receive Crypto Staking Rewards

    eToro automatically stakes your ETH, ADA or TRX holdings for you – users simply need to wait and they will be distributed their crypto staking rewards monthly, directly into their account balance, in increments of the coin held. There’s no requirement to lock up your assets.

    This crypto passive income is yours to keep and withdraw at any time – as eToro is also an exchange you can trade it for fiat currency when you wish to sell and realise your profits. The more staking coins you hold in your eToro wallet, the more annual yield you will earn over time.

    Read more about how to buy cryptocurrency in 2021 here.

    Open eToro Account

    Your capital is at risk.

    Is Staking Crypto Safe?

    While crypto staking may hold many benefits for those who engage in it, some risks must be considered as well. They include:

    • Possible exploits or hacks

    This is what has driven some investors to use hardware wallets for their staking activities. In the last two years, there have been several reports of hacks and exploits on small exchanges and decentralized protocols. eToro has been unaffected.

    • A decline in the value of the staked asset

    This is what is considered an impermanent loss. When the asset is locked up, its value may decline, forcing the investor to sell off. However, if he doesn’t sell off, he may recover from the loss when the price of the asset rebounds.

    • Loss incurred through a third-party 

    Where an investor uses a SaaS platform to stake his assets, he is likely to incur losses if the validator is not efficient in processing transactions.

    Taxes Related to Staking

    Many regulatory bodies are yet to assume a stance on crypto staking because it is a relatively new concept. Yet, earlier this year, UK regulators updated tax guidelines to include crypto staking classifying it into a similar vein as crypto mining.

    In the US, there are still debates as to the position of crypto staking in terms of taxes- whether it is in the same category as crypto mining. The United States IRS issued guidelines on crypto mining in 2014, declaring that mining is a business and would result in taxable gross income. 

    What is the Future of Crypto Staking?

    Staking has become a lucrative venture for investors wanting to earn crypto passive income as an alternative to daytrading, or choosing to sell cryptocurrency and realise profits – it provides a way to hedge against downside risk, and compound gains.

    The growth of the industry will be spearheaded by Eth 2.0 staking as the complete integration of the PoS model draws near. While the benefits outweigh risks, investors still have to exercise due diligence if attempting to stake coins on small exchanges and lesser-known platforms.

    We recommend eToro as the best crypto staking platform especially for beginners as users don’t need to do anything more complex than simply buying and holding supported staking coins – ETH, ADA or TRX – on the exchange in their free wallet. It also supports copytrading of professional traders and a social forum to network with other beginner and intermediate investors on the platform.

    Several other of the best coins to stake are supported by reputable exchanges and crypto staking platforms Binance and Coinbase.

    The environmental benefits of crypto staking is also another plus point. The PoW consensus has been faulted by some for its implications on the climate. This is another area in which crypto staking bests crypto mining.

    eToro - Our Recommended Ethereum Platform

    Our Rating

    eToro exchange
    • Monthly Staking Rewards for Holding Ethereum (ETH)
    • Free Secure ETH Wallet - Unlosable Private Key
    • Regulated by FCA, ASIC and CySEC - Millions of Users
    • Copytrade Profitable Ethereum Investors
    • Buy with Credit card, Bank wire, Paypal, Skrill, Neteller, Sofort
    eToro exchange
    68% of retail investor accounts lose money when trading CFDs with this provider.

    FAQs

    What does staking mean in crypto?

    Crypto staking involves locking up your cryptocurrency assets for an extended period of time to unlock rewards or earn interest on your coins. Crypto staking rewards come in the form of more coins, making staking one of the simplest ways to earn crypto passive income.

    What is the best crypto staking platform?

    We recommend eToro for the same reasons we do to all investors and traders - it's trusted by 20 million users and regulated by the FCA, ASIC and CySEC. In terms of staking coins, it currently supports staking ETH, ADA and TRX with the possibility of other supported staking coins being offered in the future.

    Any risks in crypto staking?

    There can be risk attached to staking coins that are relatively new to the cryptocurrency markets and may end up as failed projects - earning crypto staking rewards on a token that crashes and doesn't recover won't be profitable long term. This is unlikely to happen with crypto majors such as ETH and ADA - if you're wondering how to stake crypto with low-risk, eToro is a regulated exchange which supports the best coins to stake, Ethereum and Cardano.

    Is crypto passive income a safe investment?

    The cryptocurrency markets have outperformed all other financial assets over the last decade, including Gold, and bank savings accounts. The crypto marketcap still has room to grow, currently at around a quarter of the size of Gold. Staking coins in order to earn more of that coin is safer than attempting to daytrade the volatile swings in the market.

    X

    eToro - Best Staking Platform

    eToro - Best Staking Platform

    eToro - Best Staking Platform

    Stake Crypto

    68% of retail CFD accounts lose money.

    eToro - Best Staking Platform
    Stake Crypto

    68% of retail CFD accounts lose money.

    X

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