The cryptocurrency world has evolved since Satoshi Nakamoto created the ‘mathematical miracle’ called Bitcoin. Asides from providing a great way to store value, cryptocurrencies present a myriad of opportunities for long and short-term investors to benefit.
Earning with Crypto
The most conventional and cliché way to profit from cryptocurrencies is simply buying low and selling high. Although simple, the drawback of this strategy is that investors can only make a profit after an upward price surge. A great way for cryptocurrency holders to earn irrespective of market conditions is through staking.
What is Staking?
Staking means locking up one’s coins or tokens for a particular duration to earn periodic rewards commonly referred to as APY (annual percentage yield). During the staking period, the user can only view his tokens on his wallet but cannot sell or transfer them unless he decides to unstake. Staking is drawn from the proof of stake (PoS) consensus model which requires network participants to lock some tokens, thus forcing them to act in good faith when validating transactions on the blockchain.
The advent of DeFi has popularized staking even more as a means to earn passive rewards for holding cryptocurrencies. Delegators who stake their coins on PoS-based blockchains can earn as much as 5% to 15% APY. Here is a list of coins that offer the highest staking rewards.
BNB is one of the fastest growing digital assets in 2021. Its price and utility attained significant height following the launch of smart contracts through the Binance Smart Chain. While holders have reaped the benefits of the price surge, validators and delegators on BSC have had twice as many reasons to smile.
Delegators that stake BNB earn rewards of about 9% to 11% APY, although staking rewards can go as high as 30% in APY depending on the total amount of staked BNB.
Ranked the 42nd largest cryptocurrency by market capitalization, Cosmos (ATOM) aims to resolve some of the bottlenecks plaguing cryptocurrencies. The digital asset which runs on a Delegated Proof of Stake (DPoS) consensus mechanism was created to introduce a faster, cheaper, and scalable system of connected blockchains.
ATOM is one of the leading choices for network validators and delegators because of its high staking rewards. The annual return for delegators ranges between 8% to 12%. This can go even higher if the amount of staked ATOM is below two-thirds of its total supply.
Widely touted as one of Ethereum’s fiercest competitors, Polkadot has slowly climbed up the ladder to rank as a top ten cryptocurrency. Staking DOT is quite different from many other Proof of Stake digital assets. Entry requirements are quite high. Becoming a validator requires one to own at least $40 million worth of DOT, while at least 300 D0T (worth about $4200 at the time of writing) is needed to become a nominator or delegator. The financial reward is however worth the capital as delegators on Polkadot earn up to 16% annually.
Algorand was designed to create a borderless economy that prioritizes security and enhances scalability. Built on the Byzantine consensus, Algorand features a Pure Proof of Stake (PPoS) model. For delegating ALGO to validators, users earn between 8% to 10% in estimated annual yield.
Although Ethereum is yet to complete its transition to proof of stake, it is difficult to omit the second largest cryptocurrency from the list. Ethereum 2.0 Beacon Chain smart contract already has over $14 billion worth of ETH since staking commenced in December 2020. Staking rewards on ETH ranges between 7.5% to 20% annually.