Exploring the Highest Staking Rewards in the Crypto Market
- Market cap, team, and network governance should be considered before staking on a blockchain.
- Solana, with 7.48% APY provides one of the higher returns for a large network.
- Take care when staking, as unforeseen negative events could lead to capital loss and opportunity costs.
- How to earn staking rewards
- The best crypto staking platforms
- How to choose the right staking projects
How Do You Earn Staking Rewards
PoS and DPoS are consensus mechanisms for validating transactions and producing blocks for a blockchain. To become a validator, a participant who verifies transactions, you must stake or lock up your cryptocurrency on a blockchain to support the latter's operations.
Staking rewards act as your incentive for supporting the network and keeping it secure. The amount and duration of your staked assets usually determine the staking rewards you will receive.
You earn rewards typically in the form of the network’s native tokens. Crypto staking ETH, for example, will also result in ETH rewards. However, as investors explore other staking protocols such as liquid staking protocols, rewards may be offered in a mix of the staked asset and/or the protocol’s native token.
With Marinade Finance, a Solana liquid staking platform, a user earns MNDE (the platform’s native token), in addition to Solana rewards.
Factors to Consider When Choosing Crypto Staking Networks
While choosing the crypto with the highest staking Annual Percentage Yield (APY) seems to be the logical choice, there is more to staking than meets the eye. What is the use of high staking rewards if the network fails and the token eventually crashes? By considering various factors, you can make an informed decision when choosing a cryptocurrency for staking. Additionally, staying updated with market trends and community sentiment can provide valuable insights into potential staking opportunities. Here are a few factors to consider:Market Capitalization
The cryptocurrency market cap, short for market capitalization, refers to the total value of a cryptocurrency It is calculated by multiplying the current price of a cryptocurrency by its total circulating supply. Polkadot has held a market cap of over $3.0 Billion since it started trading on crypto exchanges last October 2020. The network has consistently ranked in the top 20 cryptocurrencies. The bigger the market cap, especially when sustained for a prolonged period of time, means the better network to stake on. A high market capitalization usually implies market validation and trust. You can somewhat be assured that your investment will not go to zero.Team
Satoshi Nakamoto is the anonymous creator of Bitcoin. In the past, unknown developers and teams built the foundations of the crypto space. Nowadays, venture capital-backed teams create most new networks. In this new paradigm, stakers must research and understand the financial capacity and team credentials of each network. Without the proper backing, a staking network may never reach adoption or worse, may be a fly by night operator.Network Governance
Governance mechanisms determine how decisions are made within the network, including protocol upgrades and changes. Transparent and decentralized governance can enhance trust in the cryptocurrency's ecosystem. In May 2024, a commenter on X (formerly Twitter) revealed how 84% of the Sui Network’s total token supply is held by the Sui team. Critics argue that the team could easily move the tokens and dump them into the open market. Such centralized governance can deter stakers from participating in staking activities on the network.Where are the Highest Crypto Staking Rewards?
With hundreds of blockchain networks prowling the crypto space, where is the best place you can earn staking rewards? Finding the highest staking rewards can be like finding a needle in a haystack. We have curated a list of the larger blockchain networks, ranked based on the total value of staked assets.
Solana, the 2nd largest network, provides over 7% APY in staking rewards, far outpacing BNB Chain and Tron networks.
What Affects Crypto Staking Rewards?
Several factors can affect how you earn staking rewards. While it is known that staking amount and duration can directly affect your rewards, other elements can cause staking rewards to fluctuate.Staking Platforms
We have mentioned previously that various staking platforms take a commission from your rewards. Lido Finance, the most popular Ethereum liquid staking platform, takes a 10% commission on earned rewards. Other staking pools may charge more depending on the network. Consider this when choosing networks and platforms to stake on.Blockchain Network Parameters
Each blockchain network has its own rules and parameters that determine staking rewards. These rules can include the block reward size, the block time, the minimum stake amount, and the maximum supply of coins. Cardano, a DPoS network, has a design called saturation. When a staking pool reaches a certain staked amount, the staking pool and its staker receive fewer rewards. This design prevents a staking pool from becoming too large and combats centralization.Validator Performance
Validators performing well and maintaining high uptime are likelier to earn higher rewards. This is something to monitor when solo staking. Should your validator go offline for whatever reason - loss of electricity or home internet- you will lose rewards. Validator and infrastructure uptime is one of the main reasons solo stakers may run their node through cloud hosting providers such as Amazon Web Services. These cloud services allow the staking process to run 24/7. By understanding these factors, you can make informed decisions about crypto staking and maximizing their rewards.How Often are Crypto Staking Rewards Distributed
A staker may receive staking rewards in various time frames depending on the networks. These can range from seconds to hours and days. Crypto staking with Cosmos results in staking rewards approximately every 7 seconds. Meanwhile, investors crypto staking with SUI will earn rewards every 24 hours. Compounding your staking rewards will also result in higher returns. Investors should also consider this rewards-time factor when choosing the network for their crypto assets.How to Choose the Best Crypto Staking Platform
Choosing the best crypto staking platform depends on several factors. You should consider:- the cryptocurrency you want to stake
- the staking rewards offered
- the platform security
Solo Staking
Solo Staking refers to crypto staking on a blockchain network by connecting directly to the network. A staker sets up their own computer, which runs a copy of the blockchain software. These computers are called nodes.
By staking the required cryptocurrency, the node then turns into a validator, which verifies transactions on the network.
Here are a few things to consider when choosing solo staking:
- Security: Solo staking is the most secure form of staking available. You do not rely on third parties and don't get exposed to the security risks of those platforms and smart contracts.
- Capital Barriers: Solo staking can become very expensive depending on the network. Setting up a validator can cost hundreds of thousands when you combine the cost of the computer infrastructure and the required staked crypto.
- Technical Requirements: You will have to learn coding and computer building to set up a node. This can be daunting for many participants.
Staking Pool
With staking pools, users combine their funds with other staking participants. The staking platform operator manages the pool and maintains the hardware and software. Users receive staking rewards based on the amount and duration staked within the pool.
There are many kinds of staking pools, from liquid staking and Delegated-Proof-of-Stake networks to crypto exchanges. While they are not as secure as solo staking, staking pools do present many benefits:
- Accessibility: Staking pools (not including crypto exchanges) do not require any minimum staked amount nor an individual to perform Know-Your-Customer (KYC) processes. This provides accessibility from both a financial and identity standpoint.
- User Experience: Whether it is a beautiful platform or seamless user-interface, third-party platforms aim to provide a great experience. For crypto exchanges such as Kraken, their all-in-one offering from staking to trading, allows users to access everything from the Kraken platform.
- Commissions: Unlike solo staking, where a stakers gets all the staking rewards, the third-party platform will take a commission that can range anywhere from 10% to 30% of total staking rewards.
Risks Involved in Staking Coins for Passive Income
As good as it may sound, staking is not a risk-free investment. Even staking for large networks or protocols can lead to absolute loss in investments. Make sure to consider the risks before engaging in staking.Capital Loss
Many blockchains that launched during the 2020-2021 period have yet to recover in token prices. Flow Blockchain once supported a price of $20 per token but has since collapsed to less than $1. While the staking rewards are decent at 7%-11% APY, this does not compensate for the drop in token prices. Investors whom have been staking since 2021 have yet to recover their investments.Opportunity Costs
Aside from staking, investors can choose from several methods to generate yields from their investments. This may include airdrop farming, yield farming, and engaging with other protocols which may have higher returns. As there is a time component, in unlocking your staked assets, you can lose out on opportunities in between.General Security
Attack vectors increase as you interact with various applications and links throughout your staking journey. If you are not careful, malicious actors can attack you and lead to loss of crypto assets.Crypto Staking as a Way to Achieve Financial Growth
Staking crypto has risen as a viable method for generating passive income. As of writing, investors have staked $337 Billion worth of crypto tokens. Rather than keep idle crypto assets, you can help secure a blockchain and receive crypto rewards in return. With hundreds of blockchains, however, it is important to conduct due diligence and select the network and platform that will result in the best staking rewards for you. Consider factors such as commissions, security, and capital barriers to entry.The content of solostakers.com is for informational purposes only and should not be considered financial advice. It represents the personal views and opinions of the author(s) and is not endorsed by any financial institution or regulatory body. Cryptocurrency and staking investments carry inherent risks and readers should conduct their own research and consult with a financial professional before making any investment decisions. The owner and author(s) of solostakers.com will not be liable for any losses, damages, or consequences arising from the use of the information on this site. By accessing solostakers.com, you agree to bear full responsibility for your investment decisions.
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