The Best Crypto Staking Platforms for 2022 Compared.
If you’re new to the crypto space then you might not have run across the term ‘staking’. But what is crypto staking and how does it work? Staking is a process of locking up crypto holdings to earn rewards and interest. Pretty much like depositing money in a bank but with a much higher interest rate.
In this guide, we’re going to explain what staking options exist and how you can choose the best staking platform for your needs.
What is staking?
Before we begin, it’s essential to understand the concept of blockchain technology. Each cryptocurrency runs on a blockchain. A blockchain is a huge ‘database’ of transactions. This 'database' is immutable and distributed to thousands of computers around the world. The computers are updating it and making sure each copy is exactly the same as the other ones. Verified transactions become new blocks on the blockchain.
Mining vs. Staking.
Crypto staking is a system used to validate proof-of-stake (PoS) blockchain transactions. You deposit coins for binance pregled Avstralija a fixed period of time to earn interest. This process is similar to crypto mining. It helps the network reach consensus and rewards users who take part in it. In staking, the right to verify transactions depends on how many coins get locked inside the wallet.
Like with mining, participants get rewards for finding new blocks or for adding transactions to the blockchain. In addition to having a reward system, PoS blockchain platforms are scalable and have high transaction speed.
Did we lose you here? Fear not, let’s break it down for your better understanding.
Mining and staking are both "consensus mechanisms." These mechanisms confirm that transactions are legit and that there is no double-spending.
First off, mining. How is it different from staking? Mining is a process that ensures the performance of blockchains running on the Proof-of-Work (PoW) algorithm. The first cryptocurrency, Bitcoin, works on this algorithm. During mining, your computer tries to solve a very complicated mathematical calculation. The first miner who comes up with the solution gets some bitcoin as a reward. Miners use expensive and complex equipment and special software to make these calculations. The more computing power you have, the easier it is to mine.
Staking doesn’t need as much computing power. This makes it a more green and energy-efficient way to create a new chain of blocks on the blockchain. And, هک بایننس as mentioned earlier, the algorithm is different. It's called Proof-of-stake or PoS.
How does staking work?
We’ve established that staking is how new transactions are added to the blockchain that uses the proof-of-stake model. But how does it work exactly? Participants first make a pledge to the protocol using their crypto. The protocol then selects validators from among these individuals to confirm transaction blocks. The more coins you pledge (well, stake), the higher the chance you’ll be chosen as a validator. Yeah, like with lottery tickets. Verified transactions become new blocks on the blockchain. For cryptocurrencies that support staking, PoS is necessary. Whoever participates in successfully creating a new block gets a reward in crypto. If the block turns out to be bad, the stake is lost in what’s called a ‘slashing’ event.
This is to ensure that stakers get rewards for picking out trustworthy validators, and punishment for backing bad ones. There are several different ways to take part in staking without needing to be a brainiac or dealing with technical limitations. We'll cover them a bit later.
Which crypto assets support staking?
Tezos, Cosmos, Polkadot, Solana and Ethereum 2.0 all use the proof of stake method. You can stake these currencies and many more cryptos in exchange for an interest rate.
Types of crypto staking platforms.
There exist several means of getting started with staking. Let’s look at a few of the more common.
Exchanges offer the most straightforward point of entry for future stakers. You can state the amount you’d like to stake. In return, the exchange will find a validating node on your behalf. The exchange is an intermediary between the staking party and the validating one. Most exchanges ask for a commission in exchange for staking services. Bear in mind: when you use an exchange, you don’t actually hold the keys to your cryptocurrency. You’re trusting the exchange to do that on your behalf. This creates a level of risk that not all stakers will be comfortable with.
Wallets / Staking Pools.
A staking pool consists of many different investors. They get together and pool their stakes (self-explanatory). This requires a little bit of coordination and expertise. This is why many staking pools are private organizations with high entry barriers. This prevents the pool from being more trouble than it’s worth.
Staking as a Service (SaaS) is a way to avoid many potential pitfalls associated with staking. They do this by entrusting the task to a staking service provider. Their job is to uncover and make sensible investments on behalf of the stakeholders. Services of this kind remove some of the complexity from the staking process. However, they create a centralized system, with large organizations having inordinate power. This dampens many of the philosophical advantages inherent in crypto.
Making a stake gives the stakeholder voting rights on how a given coin is governed. SaaS providers might end up voting differently, which creates a conflict of interest. So, not all things sacrificed for בינאַנסע ביטקאָין וועקסל קריפּטאָקוררענסי וועקסל
the sake of convenience might be easy to spot.
Decentralised Finance is the opposite side of the philosophical coin. DeFi allows you to make a stake using something called a ‘smart contract’ — which is basically a piece of software that executes when certain preconditions have been met. DeFi uses a given blockchain to facilitate the trade of many kinds of financial product.
DeFi staking provides a passive income to investors without asking them to collaborate with organisations whose motives are opaque, and which might be corrupt to some extent. DeFi staking tends to be cheaper, too, since there are no middlemen to worry about.
Choosing the right Staking Platform.
Staking platforms should be chosen based largely on their trustworthiness and reputation. If you don’t do your homework, you can expect to be stung.
Naturally, it's also worth considering the fees you’ll be paying to the staking platform. Fortunately, there are many platforms competing for your money, which helps to drive down the price of making a stake.
There’s risk inherent in any decision you make when it comes to investing in crypto, and staking is no different. Do your research thoroughly before choosing a platform, and make sure that you analyse your options rather than simply going with your gut.
Staking Platform Overview.
Service Type Fees Supported Cryptos Binance Exchange, DeFi No fees 5 DeFi, 77 Locked Staking Offerings Coinbase Exchange 25% ETH, ADA, ATOM, XTZ, ALGO, ranté binance DAI, more eToro Exchange 10%-25% ETH, ארנק אמון בינאנס ADA, بررسی دسک تاپ binance TRX Figment SaaS up to 12% 34 cryptos incl. ETH2, ADA, DOT, SOL Kraken Exchange No fees BTC, ETH2, ADA, DOT, SOL, ATOM, XTZ, more Lido DeFi 10% ETH2, SOL, LUNA MyCointainer SaaS 7,90€/month + 1%-2% 81 cryptos incl. ETH2, ADA, DOT, SOL Staked.us SaaS, DeFi 10% 32 cryptos incl. ETH2, ADA, DOT, SOL.
Let’s run through a few of the major players when it comes to staking. The well-known exchanges tend to support the staking of multiple PoS cryptocurrencies.
On Binance, this works through two different methods.