The Best Crypto Staking Platforms Compared (2021)
Oct 22, 2021
If you’re new to the crypto space then you might not have run across the term ‘staking’. This is a practice through which transactions are verified by many big-name cryptocurrencies; therefore, it’s worth worrying about.
Staking offers a means of earning a return on your cryptocurrency without actually having to sell it. The barriers of entry are rather low, since there’s no expensive hardware to buy and run. What’s more, by participating in the network through staking, you’re able to enhance its security and give something back to the community, all while you're earning attractive interest rates of up to 12%.
How does staking work?
Rather than having so called miners perform arbitrarily difficult calculations which use inordinate amounts of energy, staking has participants put down a portion of their holdings in exchange for a reward when a block on the blockchain is successfully validated. If the block turns out to be bad, the stake is lost in what’s called a ‘slashing’ event.
These incentives are set up such that stakers receive a reward for picking out trustworthy validators, and are punished for backing bad ones. Validators usually need a significant investment in order to get started. As we’ll see, there are several different ways to participate in staking without needing to overcome (or even be aware of) technical limitations and requirements.
Which cryptocurrencies support staking?
Tezos, Cosmos, Polkadot, Solana and Ethereum 2.0 all use the proof of stake method. You can stake these currencies and many more cryptos in exchange for an interest rate.
Types of crypto staking platforms
There exist several means of getting started with staking. Let’s look at a few of the more common.
Exchanges offer the most straightforward point of entry for would-be stakers. You can simply indicate the amount of coins you’d like to stake, and the exchange will find a validating node on your behalf. The exchange is effectively an intermediary between the staking party and the validating one. Exchange staking often involves simply leaving stakeable assets in the wallet of the trading account. While there are security issues to think about when taking this approach, it does have the advantage of being simple.
Bear in mind that when you use an exchange, you don’t actually hold the keys to your cryptocurrency — you’re trusting the exchange to do that on your behalf. This creates a level of risk that not all stakers will be comfortable with.
A staking pool is made up of many different investors who get together and pool their stakes (self-explanatory, really). This requires a little bit of coordination and expertise, and thus many staking pools are intensely private organisations where the barriers to entry are kept deliberately high. In some cases, those organising the pool might demand a membership fee, and a minimum balance staked. This prevents the pool from being more trouble than it’s worth.
Staking as a Service (SaaS) is a way for the average user to avoid many of the potential pitfalls associated with staking. They do this by entrusting the task to a staking service provider. The job of the service provider is to uncover and make sensible investments on behalf of the stakeholders who own the currency that is being allocated.
Services of this kind remove some of the complexity from the staking process. This makes it an extremely accessible means of participating in the blockchain, and of handling crypto more generally. However, they create a centralised system, with large organisations being given inordinate power.
This dampens many of the philosophical advantages inherent in crypto. After all, it might strike many as counterintuitive to hand control of a new financial system to an organisation that is effectively akin to a bank.
Since making a stake entitles the stakeholder to have a say in the way that a given coin is governed, SaaS providers might end up voting for different reasons to the stakeholders they represent, which creates a conflict of interest. So, not all of the things being sacrificed for the sake of convenience are easy to spot.
Decentralised Finance is the opposite side of the philosophical coin. DeFi allows you to make a stake using something called a ‘smart contract’ — which is basically a piece of software that executes when certain preconditions have been met. DeFi uses a given blockchain to facilitate the trade of many kinds of financial product.
DeFi staking provides a passive income to investors without asking them to collaborate with organisations whose motives are opaque, and which might be corrupt to some extent. DeFi staking tends to be cheaper, too, since there are no middlemen to worry about.
What factors to consider when choosing a staking platform
Staking platforms should be chosen based largely on their trustworthiness and reputation. If you don’t do your homework, you can expect to be stung. This is where Cryptoradar can be hugely useful. Use the system to vet your investment before you make it.
Naturally, it's also worth considering the fees you’ll be paying to the staking platform. Fortunately, there are many platforms competing for your money, which helps to drive down the price of making a stake.
There’s risk inherent in any decision you make when it comes to investing in crypto, and staking is no different. Do your research thoroughly before choosing a platform, and make sure that you analyse your options rather than simply going with your gut.
|Binance||Exchange, DeFi||No fees||5 DeFi, 77 Locked Staking Offerings|
|Coinbase||Exchange||25%||ETH, ADA, ATOM, XTZ, ALGO, DAI, more|
|eToro||Exchange||10%-25%||ETH, ADA, TRX|
|Figment||SaaS||up to 12%||34 cryptos incl. ETH2, ADA, DOT, SOL|
|Kraken||Exchange||No fees||BTC, ETH2, ADA, DOT, SOL, ATOM, XTZ, more|
|Lido||DeFi||10%||ETH2, SOL, LUNA|
|MyCointainer||SaaS||7,90€/month + 1%-2%||81 cryptos incl. ETH2, ADA, DOT, SOL|
|Staked.us||SaaS, DeFi||10%||32 cryptos incl. ETH2, ADA, DOT, SOL|
Let’s run through a few of the major players when it comes to staking.
The largest exchanges tend to support the staking of multiple PoS cryptocurrencies. In the case of Binance, this works through two different methods. There’s ‘locked staking’, which will simply stake your coins for a fixed period, after which you’ll get it back. Then there’s a DeFi staking option for a limited number of currencies (though this is actually performed by an outside organisation, and not by Binance itself).
Coinbase is another big exchange. To stake on this platform, you simply move the funds you’d like to stake into the ‘vault’. If you’re staking a certain kind of coin, this might mean locking them in for a fixed period — though this isn’t always the case. The staking fees are pretty steep, but the platform is intuitive and secure.
Kraken is somewhat distinctive, in that it allows something called ‘off-chain’ staking. This basically means that you’re simulating the rewards you’d get from a real ‘on-chain’ stake. It’s available only to certain customers, with most limitations coming as a result of where you are in the world. Off-chain staking isn’t just limited to proof-of-stake crypto, since you’re not really using the blockchain to make the stake. You can therefore stake Bitcoin, and even fiat currencies like the dollar or euro.
eToro offers staking for Ethereum 2, Cardano and Tron, with plans in the pipeline for other PoS currencies like NEO, Tezos and EOS. It’s simple to use — as is the case with Cardano and Tron, you only need to keep the coin on the platform in order to stake it. You’ll get a superior APY depending on your level of membership, with those in the ‘Diamond’ Club keeping 90% of their yield.
If you’re interested in DeFi then you might stake directly through the Lido platform, which works by exchanging your cryptocurrency for a staked equivalent coin.
If you’d like to stake directly from your hardware wallet, then the Nano X or S from Ledger is a popular choice. You’ll be able to gain rewards by staking directly through the app, while keeping your investment secure. Ledger’s marketing suggests that you’ll be able to achieve complete financial freedom through the product using a combination of staking and lending — while this is certainly possible, it’s by no means guaranteed.
When it comes to staking as a service, the market is a little bit younger, and you might find yourself looking to lesser-known providers like MyCointainer, Staked and Figment Networks.
Estonia-based MyCointainer offers a range of attractive features, including the ability to track multiple stakes in multiple coins at the same time. It comes with a built-in exchange, so you’ll be able to get your fiat currency exchanged and staked via a single point of contact.
Over in New York, Stake.us provides support for a smaller number of coins (just 30 or so against MyContainer’s more than 100). Staked.Us also supports DeFi lending of digital assets.
Figment Networks is based in Canada. It offers a still more limited number of protocols, but it’s backed by a couple of influential blockchain-specialised venture firms. With a well-established and experienced team behind it, this is a platform that’s worth paying attention to in future.
How to stake crypto
The actual process of staking your crypto will vary depending on the currency you’re working with, and the method you’re using. Let’s run through a few of your options.
On an exchange
Having chosen a crypto exchange, you’ll typically find a list of all of the currencies you have available. We’ll take Kraken as an example, but the basic layout will be similar in most exchanges. Find the currency you’d like to stake, and make sure that you have the coins available in your wallet. If you can navigate Paypal, or your bank’s website, then you should have little trouble.
On a wallet
Staking directly through a wallet requires a little bit more expertise, but that doesn’t mean that it’s beyond the reach of a casual investor. You’ll need access to a wallet that supports staking. Simply download the wallet in question and follow the instructions. This is the case with hardware wallets like Ledger, too — you can stake from within the app.
On a Staking-as-a-Service platform
To start earning through an SaaS platform, you’ll need to set up an account at the relevant platform, and then either buy new coins or deposit your own. Your profits are generated at regular intervals. In most cases, you’ll see your annual earnings listed alongside the supported currency. Services like this are designed to make things simple, so you can stake multiple coins through a single platform.
On a DeFi staking platform
If you’re staking using a DeFi platform then you’ll be essentially lending your coins over to the platform. They will then use the coins to invest in projects via decentralised finance. In the case of Binance, you’ll be presented with a choice between flexible staking and locked staking. The former will earn you a slightly lower APY, but it does mean that you’ll be able to withdraw your stake at any time.
In the case of Lido, you’ll be able to connect your wallet to the DeFi platform in exchange for a set reward fee, at a fixed transaction cost (which is in dollars). Here your currency will be exchanged for a staked equivalent (such as ETH for stETH). You’ll get the rewards in real-time, without the risk of downside.