Cryptocurrencies offer plenty of opportunities to earn money. You can mine, trade, or even invest in coins to make a profit. These are not always the best ways to profit as you will have to consider many aspects to succeed. Mining requires money and deep knowledge of hardware to be able to purchase the equipment, then install and maintain it. There is another way to profit from cryptocurrency, called staking. By reading this article, you will learn more about staking and the best coins to stake.
Staking basics
Staking defines the process of holding a particular cryptocurrency on a blockchain to make a profit from the interest. This is a mutually beneficial feature, which provides stakeholders with profits and the network with a higher security level. Storing or locking a particular amount of tokens allows users to become validators by owning a node.
Unlike mining, staking requires no calculating power. You are not required to buy expensive GPUs or ASICs to earn interest. There is no need to compete with other miners or to consume more electricity. Additionally, stakeholders don’t need to maintain their hardware setup.
Staking offers the following benefits:
- Lower entrance investments compared to mining. Even if you need millions of tokens to be locked, some coins’ prices will allow you to buy them at a low cost.
- No additional investments are required. You will not have to maintain the hardware or update it to stake.
- Long-term staking guarantees more profits. If the currency’s price grows, you will earn more money by staking.
Best coins to stake in 2022
Top cryptocurrencies that you can stake to earn profits:
Terra (LUNA)
LUNA is a token of the Terra project. Unlike many other stablecoins, LUNA uses algorithms that help to maintain the balance between stablecoins and fiat currencies. Even if the price of UST (a USD-equivalent stablecoin) falls below $1.00, you can easily exchange it for LUNA and get profits from staking it.
LUNA’s main strength when it comes to attractiveness is not only in its simplicity. An average staking reward is above 12% annually, which increases the demand for this particular token.
Cardano
This is a public distributed ledger network with an open-source code. Cardano’s cryptocurrency is called ADA. The development of the project is conducted by Cardano Foundation. Cardano consists of two main layers:
- The settlement layer is responsible for transaction tracking.
- The computation layer is responsible for running smart contracts and various applications on the blockchain.
Like many other proof of stake (PoS) projects, this platform allows community members to earn interest by staking the native ADA token. Stakeholders create pools to earn more interest. There is an interesting feature about those groups of ADA holders. If too many people are in a pool, the rewards become less valuable. This stimulates members to create new pools and diversify tokens across various groups.
The average annual reward rate is 4.5%, which is not as competitive as compared to the previously described Terra, but by staking tokens in various pools, you can earn even more.
Polkadot
This is one of the best cryptocurrencies to stake in 2022. This project operates two types of networks. The main chain, which is called a relay blockchain, allows for conducting permanent transactions. Another part of this platform is called a parachain. The latter can be customized for any amount of use. By adding this solution, Polkadot makes all parachain transactions as secure as if they were conducted on the main chain.
The minimum number of tokens that are required to be locked to benefit from staking is currently a minimum of 120 DOT. To invest in nodes, you will need to stake as many as 350 DOT. Being one of the highest return staking coins, DOT’s annual yield is 14%.
Polygon
This is a second layer protocol, which was created with a single aim, to scale the basic Ethereum network. The network connects all the Ethereum-based applications to ensure that they are interoperable. Polygon can provide up to 7,000 transactions per second and ensures that all dApps that were built on the Ethereum network, interact with each other without issues.
The blockchain works with validators (stakeholders who have locked a certain amount of MATIC tokens). Holding MATIC coins allows you to participate in the governance of the network. To start staking MATIC tokens, you need to connect a MetaMask wallet to Polygon Web Wallet. When it comes to an average annual yield, this is a volatile parameter, but you can use a Polygon calculator to determine this.
Hydra
Hydra made its first steps in 2018 by publishing a document that described the fundamentals of the chain. After studying the market, the team offered a solution to create a network that works on the top of the most popular blockchains, including Bitcoin, Ethereum, and Qtum. This approach was already applied by projects such as Litecoin and Bitcoin Cash. Hydra offers some exclusive economic features but one of its most interesting features to token holders is its approach to staking.
The team has decided to use a mixed inflationary/deflationary approach, which makes it possible to burn almost 100% of transaction fees to increase the rewards. This helps the project to support the price, making it profitable for stakers to lock tokens. The entrance amount to start staking is comparatively low. 10 HYDRA tokens are required to be locked in your wallet to invest in the node (about $80 as of April 12, 2022).
Solana
The initial work on Solana began in 2017 and was officially launched in 2020. This is an open-source blockchain network, which aims at providing various DeFi and other solutions. Solana provides developers with all the necessary tools to create various types of decentralized applications. The blockchain uses an innovative proof-of-history consensus mechanism, which is combined with the underlying proof-of-stake mechanism.
Solana is known for its short transaction processing time, which makes it faster to transfer tokens. The validation time for any type of financial operation and smart contracts is significantly decreased. Solana attracts the interest of both retail users and enterprise-level users. The innovative technical solutions that were used during the development phase contribute to the higher scalability of the blockchain.
By locking SOL coins for the validation node, you will receive a high staking reward, which is equal to 11% annually. To hold coins, users can use various wallets, including Ledger, Atomic Wallet, and Exodus.
Algorand
This blockchain network was designed to be a foundation for decentralized apps of all kinds. It provides the developers with all the necessary tools, scalability, and security to create applications that are considered to be among the most reliable.
Like many other projects, Algorand sees its mission in providing users with one of the fastest blockchain facilities. Additionally, the team looks at making the network cost-effective by using the pure proof-of-stake protocol. This mechanism was designed to create a more democratic and decentralized community, which is proven by the minimum amount required for staking. To become part of this process, you need to invest as low as 1 ALGO.
This idea seems to be brilliant as the network is likely to provide more validators than any other existing blockchains. However, there is also another side of the coin, some validators are not fully engaged in blockchain activities. As for the profits from staking, you can get as much as 5% by locking ALGO on your wallet.
Avalanche
This is a layer one blockchain aiming at unseating Ethereum when it comes to transactions and smart contracts. The team of this project did their best to increase transaction throughput. The current speed is 4,500 TPS, which is significantly above the same parameter for Ethereum.
The architecture of Avalanche comprises three various blockchains, C-Chain, X-Chain, and P-Chain. Each of these layers was designed for its own purpose. This makes Avalanche work in a different way as compared to traditional blockchains like Bitcoin or Ethereum, where transactions are validated by all nodes available.
When it comes to investing, AVAX is considered to be one of the best coins to stake as the platform can scale to provide millions of validators. The minimum amount of AVAX required is 25. However, validators need more tokens to stake (2,000).
ICON
This is a decentralized blockchain allowing the connection to various popular networks like Ethereum or Bitcoin. This is a kind of bridge that helps users of various distributed ledgers to interact. ICON uses the LFT2 consensus mechanism, which is an upgraded version of the standard proof-of-stake where two-thirds of nodes need to agree to allow the transaction. By using this hybrid, the blockchain protects its users from various malicious activities. Staking ICON allows you to earn about 16% annually as a reward.
Velas
Velas is a comparatively new blockchain that appeared in 2019. Velas was created by Alex Alexandrov, an entrepreneur, who is known for successful projects such as the cryptocurrency payment gateway, CoinPayments.
Velas introduces an innovative blockchain technology, which combines the best parts of Solana’s blockchain code and Ethereum Virtual Machine. Such a hybrid allows the system to conduct a record of up to 75,000 transactions per second.
In Addition to the high throughput, Velas offers cost-effective transactions. While this amount is far above $1 on average when it comes to blockchains like Ethereum or Bitcoin, Velas allows users to save money with the cost of each transaction being far below $0.01.
Velas is a user and developer-friendly blockchain. Network users can get access to the account by using cutting-edge technologies without the need to use passwords. When it comes to developers, they are provided with all the necessary tools to create various types of dApps.
VLX, the Velas native token, is the top-performing staking cryptocurrency that has attracted much attention since the moment of its inception. The team does its best to increase the interest in the project by providing the developers with various exclusive features like VelasPad, the platform for launching dApps on top of the Velas blockchain, and the Grant Program, a special foundation aimed at investing money in projects that will contribute to the Velas ecosystem expansion.
Based on balance, delegates and nodes create rewards tailored to specific balances, with the pool organizer receiving 40% of the node’s reward, and the remaining 60% being shared among the delegate’s balances.
To start earning from staking, Velas owners can join pools, where rewards will be distributed equally and in proportion according to the amount of stake. 90% of VLX annual emissions will be distributed between validators. The minimum amount for staking is 1VLX, which is one of the most affordable offers in the industry.
Conclusion
It is important to mention that staking is one of the most affordable types of investing in cryptocurrencies. The proof-of-stake consensus mechanism is currently very popular among blockchain developers and you can find plenty of opportunities to start staking with various tokens.
Source: Plato Data Intelligence: PlatoData.io
