How to put your crypto to work to earn passive income continuously.
What are some of the best staking cryptos out there?
I will provide my list of preferred digital assets to earn passive income through staking (yes, there are other passive income methods in crypto too, but this is the most common).
How to define “best” in this case? I will use the following criteria to work this out:
– Convenience — How many non-custodial (cold) wallets (NCWs) and exchanges permit staking? I will prioritise hardware wallets throughout this and will touch on exchanges towards the end.
– Staking yields — How generous (and sustainable) are the yields presented? Bear in mind that higher staking APYs contribute to greater inflation (unless a deflationary mechanism such as a coin burn is in place, e.g., BNB, ETH).
– Market position — Are they in the top 20, 50, or ranked below 100?
– Withdrawing (Unstaking) your funds — How long will it take to access your staked funds and the associated reward?
Staking on Cardano has been possible since the beginning of the Shelley era in July 2020.
Some NC (i.e., self-custody) wallets supporting ADA staking include Yoroi, Daedalus and Adalite, with the two options being open-source. These offer the best compatibility with different hardware wallets, particularly Ledger and Trezor models (only the Trezor Model T, not One).
If you don’t have a hardware wallet, you can create an alternate NCW for use on desktop or mobile. These allow you to do this, and additional choices such as Exodus, Atomic and Guarda are available too.
It is common to see annual rewards of up to 5%. However, owing to the vast range of staking providers (see below), this can vary, especially with exchanges charging commissions for this service.
The leading smart-contracts platform launched this service in late 2020, following Beacon Chain’s start, which marked its transition to PoS.
Ledger permits ETH staking via Kiln and Lido, the latter being the most popular PoS pool in this ecosystem, covering roughly a quarter of the total ETH staked. To promote PoS decentralisation, I recommend using a pool outside the ten biggest ones, not just for ETH but with any crypto asset.
Regarding the Trezor Model T, the most convenient option is to stake ETH using Lido via MetaMask (as shown below). From my understanding, any ETH wallet compatible with MetaMask should permit staking (Rocket Pool is another that comes to mind).
However, you should check this to ensure that your wallet is compatible by testing it out with a small amount.
I only discovered this after someone from Exodus recommended that I try this; otherwise, I would not have bothered, as I was under the impression that there was no way to stake ETH with a Trezor wallet.
For those who don’t have a hardware wallet but still prefer self-custody, ETH staking is also available using the open-source platform, MyEtherWallet (a.k.a. MEW); more info about this available here.
Check out StakingEther for detailed information about the broad range of ETH staking pools, including a corresponding rewards calculator.
Formerly known as Binance Coin, it is the native asset of the world’s largest crypto exchange, Binance.
To clarify, Binance’s centralised exchange (www.binance.com) and its decentralised equivalent (www.binance.org) are two different things for those who use NCWs.
A popular choice for BNB holders is to use Trust Wallet, Binance’s official wallet, available across numerous platforms. It offers BNB staking rewards of up to 11%.
BNB holders also benefit from a quarterly coin burn (21 to date), automatically adjusted to remove x number of coins relative to the BNB prices and blocks produced by BNB Chain during this period. This will continue until only 100 million coins (down from 200M initially). So, this deflationary supply could be advantageous for long-term coin holders; more on this in a future piece.
This link provides a tutorial on how to stake MATIC using your Ledger device. Just so you know, all Ledger wallets support staking, including any entry-level options.
To help you find a suitable validator, I recommend this website to help you compare performances among the various participants in real time.
In terms of rewards, the official Polygon website lists a typical APR of 4.95%, with details for anyone wishing to run a node to become a validator.
It is important to remember that Polygon (MATIC) staking occurs on the Ethereum network primarily for security purposes. I would advise you to read the Delegator FAQs on Polygon’s official website prior to commencing any staking.
As per Trezor (Model T), the workaround here would be similar to Ethereum by using MetaMask. I am still trying to discover another third-party service that allows you to connect with Trezor, though I imagine there will be more options down the track.
For those who don’t have a hardware wallet, it is generally best practice to use the official wallet featured by any given blockchain project. In this case, that would be the Polygon Wallet (which subsequently connects with MetaMask, Coinbase Wallet* and other providers.
*I am referring to the non-custodial Coinbase Wallet, not the exchange (centralised) version.
A leading interoperability platform founded by Dr Gavin Wood (also a co-founder of Ethereum), Polkadot is a popular staking crypto that has been sitting in the top 20 for the past few years, with an attractive yield of roughly 11% p.a.
Once again, Ledger Live is your best bet for convenience. However, you can use the Polkadot-JS wallet, which is tailored towards intermediate and advanced users and can also be used as a standalone Polkadot NCW.
Despite its popularity, the DOT nomination process provokes the ire of many within the community for two reasons:
– You need to have a minimum of 100 DOT to earn rewards. This currently equates to $580 but has had this limit for years, even when the coin’s price was much higher. I under that it is not a large amount in the grand scheme of things, but it leaves much to be desired when several other crypto assets have a minimum stake of a few dollars.
– The unbonding period (when you can re-access your DOT) is 28 days, which has been the case for at least a year.
Frustrating, I know. Regardless of other chains having a significantly shorter withholding period (including Kusama, Polkadot’s testnet, which has an unbonding period of 7 days), it seems that this 28-day timeframe will remain (see Kianenigma’s posts in this GitHub discussion).
The best NCW choice for staking AVAX would be to go through the dedicated Avalanche Wallet, which allows you to create your wallet or be accessed via a Ledger device.
Currently, AVAX staking is unavailable on the Trezor Model T and based on the slow uptake of adding new assets to work with their devices, I would expect it to be around for a while.
A drawback with this current process is the minimum of 25 AVAX required for delegating AVAX to a validator pool; this equates to ~$433. Hopefully, this will be lowered in the future, mainly if the coin’s price were to increase significantly, but I am not holding my breath.
I recommend this article for a comprehensive guide about delegation AVAX.
Here is a helpful resource to help you find a suitable validator for AVAX and a related rewards calculator.
To stake the coin using the hardware wallet, you need to have Ledger Live installed > download the ALGO app > visit MyAlgo Wallet > Select an account (Tx address) > Select ‘Governance’ from the drop-down arrow icon (top left-hand corner below the address bar).
You need to wait until you are eligible for the next governance period (or see previous ones for related info if preferred).
The purpose of this setup (unlike delegation for other PoS chains) is to encourage active participation by voting on various proposals to help shape the ecosystem. Those who do get involved are subsequently rewarded (as a form of staking per se).
The two best ways to delegate ATOM include using the Ledger Live app or the Cosmostation app.
To get an idea of recommended and trustworthy validators, Cosmostation developed Mintscan, which can help you track the status of a given ATOM transaction.
Despite being out of the top 50 cryptos by market cap, XTZ still has a strong following and remains a popular crypto, with an impressive range of convenient staking options relative to more popular assets.
It is available on Ledger devices, with the in-house app (Ledger Live) or going via Galleon wallet (which can also be used to create a free keystore wallet without any hardware wallet needed).
SimpleStaking used to be the best option for staking XTZ on a Trezor Model T. However, it is shutting down and is no longer available. Hopefully, Satoshi Labs (the entity behind Trezor wallets) will find a suitable alternative.
I made a related video if you would like a step-by-step tutorial on the multiple ways to delegate XTZ.
Wildcards: Solana (SOL)
I can hear and see the disdain already by Solana fans that I am featuring this hear on my ‘wildcards’ list.
Yes, it is a renowned crypto, but I have been in two minds about it over the past 12 months. Two reasons for this: repeated network outages and other glitches led to Solana receiving extensive criticism about this. Secondly, doubts surrounding how (de)centralised its ecosystem continue to be debated.
Axie Infinity (AXIE)
This gaming token had an incredible performance in 2021, reaching 300x at its peak that year. It is still a favoured asset, just outside the top 50 based on market cap.
I hold some AXIE and received generous (over 50% APY) on Earn rewards until recently (this was via the Aussie crypto exchange Swyftx until they removed the feature due to regulatory uncertainty here.
Nonetheless, here is the official website for staking AXIE. As it is an ERC-20 token, you can access and manage the crypto with the abovementioned Ethereum wallets with your Ledger device.
Shiba Inu (SHIB)
Worthy of a mention (at least a passing one) despite its meme-coin label. There is a lot of activity on this network and an enthusiastic community behind this. It will do well in any bull runs down the track, as a handful of meme coins often do.
SHIB staking information is available through its website under the ‘bury’ category.
What about going through an exchange?
Various exchanges are continuously expanding their staking options, and I do not have a specific resource detailing who stakes what, as this can vary depending on your jurisdiction.
Binance, Kraken, KuCoin and Coinbase are popular options. Whilst the latter has few options compared to the others, it continues to expand, subject to regulations.
I would refrain from holding significant sums of money/crypto on a centralised exchange, given the risk of a potential hack or something going haywire (no need for examples). Having said this, I acknowledge that I have used Binance, Coinbase and Kraken for several years and have yet to experience any major issues.
For more information covering exchanges and more details about reputable options on the market, I have covered this in a separate article.
More food for thought
There is an increasing number of staking assets out there, notably with the emphasis on Proof-of-Stake as chains/assets migrate from Proof-of-Work (e.g. ETH and ZEC are two notable examples of late) or most likely launching on the former.
Despite impressive APYs, from an investor’s perspective, if the coin has low developer activity, dubious credibility (although not always evident) and consistently poor performance compared to other cryptos (yes, the entire market’s down, but some assets are on the cusp of collapsing, if not already), then think twice before delegating your crypto to a stake pool, let alone investing in it in the first place.
Of course, I should have featured many other digital assets (AAVE, come to think), but there is only so much space and time to make the cut here.
A word of warning before proceeding
It is important to remember to do sufficient research before assigning funds to any stake pool. The main reason for this is slashing, whereby a portion of your staked assets (including the validator/pool operator) could be forfeited if they attack the network or utilise unauthorised staking software (amongst other reasons).
This system is set up to reward good behaviour and penalise nefarious actors, which is also a case of self-sabotage for them as they need to stake crypto to earn rewards.
To learn more about the pros and cons of staking, The Blockchain Council has summarised this in a recent piece.
I recommend checking out Staking Rewards to learn more about popular choices and more information about this process.
None of this is financial advice, and I am not a financial advisor.
Please do sufficient research before investing in any crypto assets, staking, NFTs and other product affiliated with this space.
I acknowledge that I hold ADA, one of the top three holdings in my crypto portfolio. Hence, I am most knowledgeable about this from the abovementioned digital assets.
If you enjoyed this article, I recommend following my Medium page for regular reports about crypto assets, blockchain technology, and more. Feel free to check out my publication as well, Crypto Insights AU.
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Affiliate link: BitBox02 is a increasingly popular alternative to Ledger and Trezor. This is not paid advertising. However, if you were to buy one of their products via my affiliate link, I receive a small commission at no extra cost to you. Their website also has an excellent side-by-side comparison with the above-mentioned alternatives.