Staking cryptocurrencies will define the future of digital assets. Many people, however, do not know what staking means, which makes it harder to understand how to get into it.
What is Staking in Crypto?
Imagine you are an investor who wants to save a huge sum of money in a bank. Going by traditional Annual Percentage Rates (APR), your bank will pay you about 0.9% of the money you deposited. So, if you leave $10,000 in your account for 365/366 days, you will have $10,090 in your account. It is about the same idea in cryptocurrency. Proof-of-work (POW) and proof-of-stake (POS) are the most popular ways miners create your cryptocurrencies.
Cryptocurrencies running traditional proof-of-work algorithms require nodes to solve a hard-mathematical puzzle to create new blocks for which the nodes get rewards. Bitcoin for example, uses a SHA256 algorithm and creating a new block of transaction requires large graphic memory often obtained from graphic cards, and electricity. The difficult procedure required to mine bitcoin sustains its value, and miners get rewards for every block they solve.
Proof-of-stake is the most recent technology used by many new cryptocurrencies. The idea resolves the difficulty required in the traditional proof-of-work process by reducing the number of nodes. Proof-of-stake algorithms appoint holders of the highest number of coins in the network to validate new blocks. Doing this protects the interest of the entire network since acting otherwise poses more risk to holders of more coins.
Delegated proof-of-stake networks allow users of a cryptocurrency to vote for specific nodes that will manage the network on their behalf. These nodes approve new blocks and manage the network on behalf of its users. While blockchain innovators criticize traditional proof-of-work for its electricity costs and time, proof-of-stake makes block validation faster.
In most proof-of-stake based cryptocurrencies, users form a node by pulling their coins together in a staking pool. These coins combined, form one powerful node with more coins and power to validate the next transaction for rewards. The pool that contributes to creating the validating node distributes the reward for mining among themselves deducting interest based on a calculated inflation rate.
Anyone who owns a proof-of-stake based cryptocurrency can contribute their coin to a staking pool and earn staking rewards. A less common form of staking is cold staking where holders of a coin can leave their coin in a wallet without internet connection and earn staking rewards. If the holder transfers the coin, they will not receive any staking rewards. Now let’s look at the most popular staking coins in the crypto space.
Here are the Most Popular Cryptocurrencies for Staking
Tezoz is the first on our list here and is easily the most popular cryptocurrency you can stake right now. Tezoz runs on an on-chain governance model that can modify its own rules based on votes on the network. Tezoz does this with minimal disruption of the network. Tezoz is available for staking in all major exchanges. Exchanges like Coinbase and Gate.io, charge staking fees of about 30%, and the annual return is about 7%. The most interesting thing you might want to know here is that Binance will charge you zero fees if you stake Tezoz in your Binance wallet.
Dash is a blockchain-based payment solution that offers the advantage of a faster transaction, usability, and additional privacy. If you have Dash coins, you can enjoy the rewards of staking with an annual reward of 6.62%. The Dash network pays users staking rewards for running a masternode. A typical masternode responsible for governance decisions on the Dash network requires 1,000 Dash, which is $125,000 at the time of writing this article. The reward for this amount is $690.87 monthly and $8,290 annually. You may need to download a Dashcore wallet to operate a masternode.
Waves’ developers created waves to be the default platform for the development of Web 3.0 applications. Waves allow developers and organizations interested in adopting the blockchain to improve business processes and efficiency. Waves currently implement smart contracts.
If you have Wave coins, you can either lease a minimum of 1 Wave and get %6.44 annually, or generate a block by installing and running a full node. If you chose the latter, you will need at least 1,000 Waves coins. Running a node on the Wave using the LPos requires a 4GB RAM hardware and up to 40 GB of SSD.
If you consider the community, with 18.47% of the total world population in China, NEO is one coin you might want to hold and stake. NEO is a distributed network for the smart economy and the first Chinese open-source blockchain project. NEO allows users to hold NEO in their wallets and earn NEO gas. The reward for holding NEO is about 1.39% annually. NEO operates a delegated byzantine fault tolerance and hopes to digitize assets and execute smart contracts.
Stratis is a blockchain-as-a-service platform (BaaS). A blockchain-as-a-service platform is a cloud-based infrastructure that allows the companies to deploy solutions and blockchain apps. Considering that Stratis is the first cryptocurrency to become a Microsoft certified partner. The Stratis team built Stratis from scratch in C#. Staking Stratis yields an annual return of 1.46% annually and the current price of $0.28 means you can buy and stake as much as you can.
Tron runs the same delegated-proof-of-stake DPos algorithm. Tron is one of cryptocurrency’s biggest gainers in the past 365 days. Its founder, Justin Sun has become popular for this trend in the cryptocurrency. Founded on the Etherium blockchain as a decentralized payment platform, Tron has now migrated to the Tron main net. The current price of Tron is $0.02170, and the annual return for staking Tron is 3.86%.
What Else can you do?
Staking of cryptocurrency is also possible with some hardware and software wallets like Ledger wallet, Exodus wallet, Atomic wallet, and Trust wallet.
You now know that there is a big opportunity to earn from holding cryptocurrencies, instead of leaving it idle in your wallet. There are many other cryptocurrencies not mentioned in this article. You can click here to find out about the coin you are looking for.
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