Guide to Staking Crypto in 2021
Crypto staking is the hottest new concept in the market and has many crypto investors very excited. The concept is simple. Stake your cryptocurrency asset for a fixed period of time and earn a percentage-rate reward over time. Depending on the crypto coin being staked the interest could be 5%, 10%, or 15% and more!
But what is the best staking crypto platform? What are the best crypto staking coins? In this ‘Guide to Staking Crypto in 2021,’ we answer these questions and more!
Best Crypto Staking Platform 2021 List
Due to the popularity of crypto staking, there are now a lot of platforms and exchanges that offer their users the chance to earn crypto staking rewards. Below is a list of the top five best staking crypto platforms this year.
- eToro – Overall Best Crypto Staking Platform
- Binance – Best Crypto Staking Platform for Flexible Lock Periods
- Coinbase – Best Crypto Staking Platform for Ease of Use
- Kraken – Top Rated Crypto Staking Platform for Choice of Asset Rewards
- Kucoin – Top Rated Crypto Staking Platform for Soft Staking
Best Crypto Staking Platforms Reviewed
Now you know the top five of the best crypto staking platforms available, let’s dig deeper into the top three of these platforms. Knowing the features available in each platform is essential in helping you to find the right platform to earn crypto staking rewards that are suited to your needs.
1. eToro – Overall Best Crypto Staking Platform
eToro is by far one of the overall best crypto staking platforms around. Not only do they provide a range of features where buying, selling, storing, and transferring is super easy but they also have a dedicated section explaining how eToro staking works.
In fact, staking your own cryptocurrency asset is quite complicated so it’s worthwhile choosing a platform like eToro that handles the whole process for you. As many of the more than 20 million people who use eToro are crypto HODLs, it is a chance to be rewarded for what you hold, provided you do not withdraw or trade on your crypto during a fixed period of time.
For example, if were to stake your Cardano (ADA) coins, you will start to earn rewards on this on the 10th day of holding the coin. For Tron (TRX), your rewards will start on the 8th day of holding the coin.
The rewards depend on your eToro membership level which includes Bronze, Silver, Gold, Platinum, Platinum+ and Diamond members. In most cases, you will get to keep 75% to 90% of the rewards you earn from staking cryptos like Cardano, Tron, or Ethereum (ETH).
If you were to stake your Ethereum (ETH) via eToro, you could earn between 5% and 6.25% rewards per year on the ETH that you stake. Better yet, you don’t actually have to do anything apart from hold the coin. The eToro platform will do all the work behind the scenes so you can just simply collect the rewards.
eToro will also send out a monthly email to let you know how much your ETH stake has increased. All the rewards you have accrued and the total amount of ETH 2.0 staking rewards you have received can be viewed in the eToro Money Crypto Wallet.
- Easy to start staking crypto ETH, ADA, TRX
- Simple-to-use platform to buy, sell, store, transfer, and stake
- Track all rewards in the eToro Money Crypto Wallet app
- Multiple membership levels allow you to maxmise earnings
- Small operational fee for staking crypto service
Your capital is at risk.
2. Binance – Best Crypto Staking Platform for Flexible Lock Periods
Binance is one of the world’s biggest cryptocurrency exchanges allowing you to buy, sell, convert one of the biggest selections of cryptocurrencies we have seen. You can also trade crypto assets using leverage through futures and options.
It comes as no surprise that with Binance you can start staking crypto on 76 Locked Coins and 11 DeFi Coins. If you’re looking for some of the best crypto staking coins, then you’ll likely find them in the Binance platform as some of the crypto staking rewards are very high.
For example, the estimated APY (annual percentage yield) for Luna Coin (LUNA) is currently 25.39%! All of the yield rewards are transparently presented on the Binance website, as shown below.
Binance also offers some of the most flexible holding periods in the industry. For example, you can stake your coins for 15, 30, 60 or 90 days before they are then transferred back to your Spot Wallet. In the Binance platform, you can have a variety of wallets to hold crypto, fiat currencies, and leveraged crypto positions.
While the Binance platform can take some getting used to, it is simple to use and provides a lot of advanced features. Everything is also laid out transparently which is important to understand the whole process.
The below screenshot is an example of a locked staking crypto ticket in the Binance platform. It shows you can stake your Luna coin for 15 days and earn an estimated 25.39% APY.
- Start staking crypto on 76 Locked Coins
- Flexible lockup period to best crypto staking rewards
- Trade crypto spot, futures and options for crypto leverage trading
- Buy, sell, convert, stake your crypto, and access NFTs, P2P products
- Platform takes a while to get used to
Your capital is at risk.
3. Coinbase – Best Crypto Staking Platform for Ease of Use
Coinbase is considered another top crypto staking platform. You can choose some of the best crypto staking coins such as Ethereum 2.0 (ETH2), Tezos (XTZ), Cosmos (ATOM), and many others. The reward yields vary depending on the crypto you are staking.
Currently, you can earn up to 5.00% APR on staking Ethereum (ETH), 4.00% on staking Algorand (ALGO), 5.00% on staking Cosmos (ATOM), 4.63% on staking Tezos (XTZ), and more.
With Coinbase you can buy, sell, convert, store, transfer and stake your cryptocurrency assets. Furthermore, you don’t need to buy crypto assets from Coinbase to earn rewards. You can transfer your assets from another wallet into Coinbase and then start earning rewards.
Ethereum and Algorand rewards are paid out daily, while Tezos rewards are paid out every 3 days and Cosmos rewards every 7 days. Rewards can be seen transparently in your Coinbase Wallet and will show up as a recent transaction.
- Buy, sell, convert, store, and stake crypto
- Easy to use web-based platform
- Daily reward payouts on some staked cryptos
- Rewards can be easily viewed in Coinbase Wallet
- Selection of staking coins limited but growing
Your capital is at risk.
Crypto Staking Explained – What is Staking Crypto?
While staking crypto may sound complicated, all of the top three best staking crypto platforms listed above make it very simple. Essentially, it is a way to earn rewards for holding certain cryptocurrency assets. It’s great for long-term crypto holders as effectively you are earning interest on staking your crypto on top of any potential capital gains from a rise in the asset’s price.
Let’s dig a bit deeper to understand what is actually happening behind the scenes and why you are able to earn rewards from staking crypto.
How Does Crypto Staking Work?
To understand how crypto staking works and why you earn rewards when you stake your crypto it is important to understand the ‘Proof of Work’ and ‘Proof of Stake’ models used by cryptocurrencies.
Bitcoin uses a proof of work model which means new coins and new blocks are mined by computers that compete to solve complex mathematical equations. The proof of stake model helps to support the blockchain by choosing from a pool of people holding the proof of stake coin.
The people who pledge their tokens, or stake their tokens, are helping the blockchain complete and validate crypto transactions – which is why they are rewarded for it. The proof of stake models ensures that all the transactions on the blockchain are verified without a centralised bank in the middle.
While some users may choose to operate their own nodes as proof of stake validators, it is far more common to delegate your tokens to a validator who does all the technical work behind the scenes. Most crypto staking platforms are known as SaaS (Staking-as-a-Service) platforms as they do all of the work for you.
Crypto Mining vs Staking
New technological advances have improved the way new coins are generated on the blockchain. Traditionally, coins such as Bitcoin were mined using the proof of work model which involves computers solving complex mathematical formulas to mine new coins.
However, now many coins also use the proof of stake model. This is where new coins are generated from a pool of people holding the coin known as a ‘staking pool.’ The proof of staking (PoS) model is seen as a huge improvement from the energy-intensive proof of work (PoW) model.
The proof of staking model allows crypto stakers to earn an income without the need for traditional crypto mining hardware. Staking crypto allows crypto holders to have their proof of stake validator nodes added to the pool by staking their coins for a fixed period of time and earn an income while doing so.
On-Chain & Off-Chain Staking
There are different types of staking services crypto staking platforms will provide.
- On-Chain staking services allow you to stake your crypto on the blockchain using proof of stake protocols. All transactions are crowded on the public ledge and viewable on the blockchain network.
- Off-Chain staking services allow you to earn crypto staking rewards through a transfer agreement between two parties that is not recorded on the blockchain network but in centralised databases.
Most staking services provided by crypto staking platforms provide on-chain staking services. However, off-chain staking services are becoming more popular and are used in methods such as peer-to-peer transactions.
The Best Crypto Staking Coins
On some platforms, there is a wide range of coins you can stake (Binance has 76 coins available for staking). However, not all of the coins may be worthwhile to lock up for a fixed time and earn rewards on. To save you time, here are the top five best crypto staking coins to start with.
1. Ethereum 2.0 (ETH 2.0)
Ethereum (ETH) is the world’s second-largest cryptocurrency and is undergoing some huge changes in its protocols. Traditionally, ETH coins were produced via a PoW protocol.
However, upcoming upgrades in ETH 2.0 mean it will transition to a PoS protocol. The popularity of this has nearly all staking platforms providing ETH staking services with rewards between 5.00% and 6.25% APY.
2. Cardano (ADA)
ADA had a phenomenal first half of 2021, surging higher more than 200%. This has attracted a lot of people to hold the coin for the long-term and stake it out. In fact, more than 70% of ADA holders are staking the coin and earning around 6.00% APY.
3. Luna (LUNA)
LUNA is another coin that has had an incredible 2021. In the middle of the year, LUNA’s price surged more than 1,000% higher. Now, the percentage of eligible tokens being staked is around 33% which is significantly higher than at the beginning of the year.
Considered one of the top DeFi coins around, stakers are currently earning around 5.00% APY just by holding LUNA, on top of any capital gain from the rise in price.
4. Solana (SOL)
SOL is another cryptocurrency asset that is in popular demand. Having surged nearly 1,000% higher in 2021, more than 76% of eligible tokens are also being staked by its holders.
This means, some users are benefiting from a rise in the coin’s price, as well as earning around 6.63% APY just by staking out the coin.
5. Polkadot (DOT)
DOT is another top DeFi coin that has experienced a huge upswing in price. More than 60% of eligible tokens are being staked by holders and rightly so. Currently, staking crypto using DOT is providing rewards of 13.25% APY.
Advantages of Staking Crypto
Now you know more about staking crypto, is it actually worth it? Let’s take a look at some of the advantages of staking crypto.
- Earn a passive source of income, just for holding crypto. As stock investors would earn dividends for holding shares in a company, crypto investors can earn more from their holdings too.
- You can start earning with just $1 worth of crypto. You don’t need to have a lot of cryptocurrencies to start earning. Yes, there are some minimum amounts you need to start staking but this can be as low as $1 on some coins.
- Staking crypto is much easier, cheaper, and more energy-friendly than crypto mining. The transition from a proof of work model to a proof of stake model is allowing more people to earn in more ways from cryptocurrency assets.
- Help validate and secure transactions on the blockchain by staking your crypto. Crypto staking is providing a service to the blockchain which is why you get paid for it. Win, win!
How to Make Money Staking Crypto
In order to make money from staking crypto, you have to choose the best staking crypto platform available and select the best crypto staking coins.
The top three platforms listed above (eToro, Binance, and Coinbase) all make staking crypto very easy. Furthermore, they provide a selection of coins that are considered the best staking crypto for 2021.
As with any form of investing, it’s best to start small and get bigger as you build your confidence. With crypto platforms like eToro, you can start staking crypto easily and learn more as you go through the process to build that confidence.
How to Stake Cryptocurrencies on eToro
Here is a step by step guide on how to stake cryptocurrencies on eToro.
1. Create Your Account
To start staking crypto you need to open an eToro account. This can be done in just a few minutes and is free to open. All you need are a few personal details.
Your capital is at risk.
2. Verify Your ID
To comply with AML and KYC regulations, eToro will need to verify your identity.
The two verification documents you will need are:
- A valid passport or driver’s licence
- A utility bill or bank account statement issued within the last three months
3. Deposit Funds
In order to start staking crypto, you need to own some. One of the best places to buy crypto is through the eToro Money Crypto Wallet. The minimum deposit on eToro is $200.
Deposit methods include:
- Debit/credit card
- Bank wire transfer
4. Buy Your Cryptocurrency
You can buy cryptocurrencies from eToro at the click of a button. There is a huge range to choose from. Simply search for the crypto in the search box and then click Trade to open a ticket and complete your order.
Your capital is at risk.
5. Stake Your Coins!
Once you’ve bought your coins, you just need to hold if for a fixed amount of days before you can start earning rewards from just holding them. This is 10 days for Tron, 8 days for Cardano, 5 days for Ethereum 2.0 and varies depending on the crypto.
You can see all of your crypto staking rewards and the value of your overall positions in the eToro Money Crypto Wallet app.
Crypto Staking Taxes
Crypto staking taxes vary depending on where you are located in the world. For US residents subject to US tax reporting requirements, earnings from staking rewards need to be reported. The 1099-MISC form is required and can be found on the official IRS website.
In the UK, HMRC provides the same guidelines for crypto staking as crypto mining but treats them separately which means it could change in the future. If the staking activity does not amount to a trade it is classed as a taxable income source.
Tips for Staking Crypto
If you’re eager to get started staking crypto with the overall best platform eToro, here are three tips to make sure you start the right way!
Make sure you use a crypto staking calculator. At the end of the day, crypto stakers want to earn more income from their holdings. But as you are locking away your crypto for a fixed period make sure it is worth it by using a crypto staking calculator to calculate your potential earnings.
Things can change very quickly in the crypto world. The best way to stay up to date is to check crypto staking Reddit groups. There is a whole community of people involved in staking crypto. Learn from others and what the next best crypto staking coin could be.
Keep it simple. There’s no need to get overly complicated with staking crypto – providing you use the right platform. For example, with eToro, you can buy, sell, convert, store and stake your crypto all from the eToro Money Crypto Wallet. One place for everything you need.
Staking crypto is literally shaking up the investment world. Earning rewards on your holdings can help generate another source of income and grow your overall crypto portfolio.
Some of the APYs (annual percentage yields) on offer are beating the banks ten to fifteen times over. But it’s important to use the right platform to make the whole process easier and manageable.
Through the eToro Money Crypto Wallet, you can access a whole range of crypto services including staking, all from one app which is easy to use. Open a free account now and see for yourself!
eToro – Best Platform for Staking Crypto
Your capital is at risk.