Home Technology The Best Cryptocurrencies To Earn Passive Income Through Crypto Staking

The Best Cryptocurrencies To Earn Passive Income Through Crypto Staking

best crypto staking

Hodling cryptocurrencies to take advantage of potentially huge price gains is all fine and dandy but what if you could use your crypto holdings to earn some passive income? It turns out it is possible on proof of stake platforms.

Proof of stake is a consensus mechanism that some blockchain networks use to validate transactions on their networks. The cryptocurrencies are locked in validator nodes to facilitate transaction processing. This approach allows users to earn block rewards and a share of the transaction fees on the network.

Staking can also be done by locking coins in a decentralized or centralized exchange to provide liquidity, lending, or even yield farming. The liquidity option provides rewards in the form of trading fees on the trading pair on which the crypto holder will provide liquidity. The lending option provides rewards from the interest that comes from the borrowers. The Yield farming option provides rewards from both liquidity provision and extra tokens generated by DeFi applications.

Here are some of the best cryptocurrency projects that offer the best staking returns. Note that they are selected based on factors such as the robustness of their networks and the ability to deliver value in the long term.

Polkadot

It is currently one of the most promising blockchain projects and it operates a proof-of-stake mechanism that is similar to Ethereum 2.0. The DOT cryptocurrency currently ranks 9th on Coinmarketcap, with a market cap of $15.6 billion and it is currently trading at $16.28. Dot is required for staking on Polkadot and rewards depend on the amount of DOT staked.

Running a validator node on Polkadot is one way to stake but it requires a huge amount of capital at around $40 million. Those that manage to achieve this will earn a 14.01% annual reward. Fortunately, one can take advantage of delegation where they lend their DOT to a validator node. Staked Dot has a 28-day unlock period.

Terra

Terra is a project that develops stablecoins backed by digital currencies. Luna is the native cryptocurrency on the Terra network and it plays the important role of exchanging Terra-based stablecoins at a stable rate. In other words, Luna is used to facilitate the stability of digital coins on the network through an incentive mechanism.

The Terra platform has a stable staking protocol known as Anchor which provides staking opportunities with a 12% annual return. Like many projects out there, running a validator node requires a lot of capital. Only the top 100 validators that contain the largest staked pools earn rewards with the current minimum threshold at $20 million worth of Luna. Participants can delegate their stake to any of the 100 validators. Luna currently trades at $5.74 with a $2.4 billion market cap.

Polygon

This is the most popular layer 2 scaling solution for Ethereum and it co-hosts some of the top Ethereum DApps such as AAVE and Decentraland. Polygon’s native token known as MATIC is used to secure the network through a proof-of-stake checkpoint layer.

Staking rewards on Polygon range from 5.5% to 20% depending on the staked MATIC amount. There is a 9-day unlocking period for any staked coins. Creating a validator node is easier than most other networks but the network selects a maximum of 100 validator nodes. The chances of being selected are quite slim. Your best bet for some passive income is by delegating your MATIC tokens to validator nodes but make sure you select nodes that charge a lower commission.

Binance Smart Chain

Binance is one of the biggest crypto exchanges and it has a native coin called BNB. The exchange also has a centralized Ethereum clone called the Binance Smart Chain which hosts dapps and uses a unique proof of stake mechanism called Proof of Authority.

The Binance smart chain facilitates staking and has only 21 validators but roughly $15 million is required to become a validator. However, users can delegate their stake to the existing validators. Rewards generated by transaction fees can rise as high as 30%.

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Sydney Ifergan

Sydney has 20+ years commercial experience and has spent the last 10 years working in the online marketing arena and was the CMO for a large FX brokerage.

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