Choosing the Right Staking Tool: A Features Comparison

In today’s crypto market, staking has thrived, with over $175 billion in crypto staked. Users have flocked to the industry to earn passive income and maximize their cryptocurrency. 

With such a promising future, platforms and products have emerged to meet users’ needs. Whether by reducing barriers to entry or by tracking and optimizing rewards, staking tools can improve the user experience.

In this article, we will discuss:

• A brief overview of how staking works
• Types of staking tools
• Staking tools comparison

…and more. 

Time to dive in!

How Staking Works

Staking is a consensus mechanism to verify transactions on a blockchain network. It first emerged as an alternative to cryptocurrency mining, Bitcoin’s consensus mechanism which requires intensive hardware and electricity.

Participants (called stakers) build computer hardware that connects to the blockchain. These hardware (called nodes) contain a copy of the blockchain software and transactions. Once stakers deposit cryptocurrency (called stake), the nodes turn into validators which help verify transactions on the network. In return for their services, stakers receive tokens as rewards.

Proof of Stake (PoS) and Decentralized Proof of Stake (DPoS) networks such as Ethereum, Solana, and Cosmos utilize staking consensus mechanisms. The crypto market has come to embrace staking with many networks being built this way.

Beyond being a consensus mechanism, staking provides users with the opportunity to earn a yield on their digital assets. Ethereum staking, the most popular network for staking, offers stakers 3.7% APR (annual percentage rate).

The Different Staking Tools

While staking has become popular, it remains an expensive and highly technical endeavor.

Solo Staking (without relying on third parties) on Ethereum requires users to invest thousands of dollars in equipment and stake 32 ETH ($64,000 as of writing). Compounding the coding and technical knowledge required to install network software, solo staking can be too daunting for most of the crypto market.

Developers have created staking tools to solve these key issues.

Virtual Machine Providers (VM)

Stakers can opt to build and run a node and validators as solo stakers. But this process requires a lengthy technical procedure involving assembling hardware, downloading blockchain software, and writing code.

Participants can instead engage a professional virtual machine provider and offload the technical work.

• Allnodes: one of the more popular providers, Allnodes caters to stakers with its cloud staking solutions. Customers may choose staking or node hosting services as part of Allnodes’ monthly subscriptions. The company offers its Bitcoin node at $100 per month.
• Blockdaemon: with over $207 million in funding, offers a suite of blockchain infrastructure tools. Blockdaemon provides cloud-based node infrastructure, allowing clients to focus on their core work rather than the challenges of node management. Furthermore, the company offers white-label solutions for corporate clients.
• Figment.io: provides comprehensive staking services to over 250 institutional clients, including Robinhood, Binance, and BitGo. Its white-label validator service allows institutions to market the validators as their own.

Virtual Machine Benefits

Aside from offloading technical requirements from users, VM providers offer a wide range of benefits.

Customer Service

The crypto market has promoted decentralization, with no intermediaries or central authority governing processes. Instead, smart contracts (self-executing code) run operations. However, this poses a challenge for troubleshooting.

A VM provider possesses dedicated customer service teams. Users can email the platform for assistance. 

Safety & Security

Professional VMs service retail users and institutional clients such as cryptocurrency exchanges. As such, they’re subject to strict security audits and standards.

For example, Allnodes works with major enterprise clients like OKX and Crypto.com. The former possesses top-notch security. 

Cloud Hosting Services

Those looking to set up their own validator will face the challenge of running their validator node 24/7. Aside from power redundancy, stakers consume over 2 TB of internet bandwidth per month.

Given the heavy requirements, stakers may choose to run a node from a personal cloud hosting account. Make sure to stick to the well-known ones for the best service.

• Amazon Web Service Marketplace: called Launchnodes, AWS guarantees 100% uptime for this service for the Ethereum client. The product is perfect for solo stakers who want to run a validator node. Pricing is quite friendly at $240 per year.

• Google Cloud: available via API or the cloud console, Google offers a Blockchain Node Engine. It takes about 30 minutes to create a blockchain node, though achieving a full sync with the network can take hours.

Cloud Hosting Benefits

Cloud hosting accounts for 45% of all nodes that operate on Ethereum. 

Here’s a short list of what cloud hosting can do for stakers: 

Affordability

Because cloud hosting services charge on a monthly subscription basis, solo stakers can reduce their initial costs. They can skip the setup costs, deposits, and lock-up periods associated with building an on-premises operation. 

Guaranteed Up-time

When validators go offline, stakers risk having their cryptocurrency deposits slashed. This penalty incentivizes operators to keep their staking operations running full-time. For users who live in areas with unstable connections, a cloud hosting service guarantees 100% up-time.

Dashboards for Node and Validator Monitoring

For stakers determined to pursue solo staking, they will have to monitor the performance of their validators. Performance monitoring could range from tracking users’ rewards and earnings to measuring electrical consumption and infrastructure runtime.

Online, open-source tools offer users staking dashboards that monitor almost everything about their validators.

With dashboards, users can see the financial performance of their staked tokens: 

• Total crypto balance
• Annual rewards rate
• Claimed rewards and
• Hardware usage

Open-source dashboards also include bots that automatically message users on Telegram and Discord. With these tools, users stay up to date on their investments. 

Dashboard Benefits

If users aim to run their staking operations as a business, a platform for measuring performance is key. Users need to see how their validator performs to maximize their earnings.

Dashboards feed users with essential data to run their staking operations:

Multi-Validator Monitoring

Multiple validators can become increasingly difficult to track. Users can link their validators together to see an overview of their staking operations. Financial dashboards show total earnings over various time periods as well as hardware usage statistics.

Real-time Alerts

Dashboards also act as a network operations center. Through various integrations with messaging platforms, stakers can get real-time updates on their staking operations. These alerts are especially helpful when nodes and validators go offline. Users can act quickly to remediate the situation.

Staking Without the Operation

While the tools listed above make the life of a solo staker easier, many of us prefer to avoid the responsibility of managing infrastructure altogether. You can still participate in network security without ever touching a command line or a virtual machine.

Staking on DPoS Networks

In Delegated Proof of Stake (DPoS), the network separates the capital from the operations.

You act as a delegator. You hold your native tokens, such as Solana (SOL) or Cosmos (ATOM), in your own wallet and vote for a professional validator. This entity performs the work on your behalf.

You retain full ownership of your assets, but the validator handles the 24/7 uptime and hardware costs. In exchange, the validator takes a small commission (usually 5% to 10%) from your earned rewards.

You can stake ATOM directly here on Solo Stakers.

Staking Pools and Liquid Staking

Because Ethereum requires 32 ETH and significant technical overhead for solo staking, most retail users opt for staking pools or liquid staking protocols. These protocols allow you to stake any amount of ETH, even a fraction of a coin.

When you deposit ETH into a protocol like Lido, you receive a “receipt” token (like stETH). This token represents your staked principal plus accrued rewards. Unlike solo staking, where your ETH is locked, LSTs allow you to remain liquid. You can still use your stETH in other DeFi applications or sell it back to ETH at any time.

Managed Staking via AI Optimizers

For those who want to maximize their returns without manually tracking every validator, platforms like Polli.co answer the bell. These platforms serve as an intelligence layer, automatically identifying high-performing validators and routing your stake accordingly. These continuous actions ensure the most reliable infrastructure always backs you.

Conclusion

Staking continues to play an integral part in crypto market operations and doesn’t seem to be slowing down any time soon. Investors and stakers alike need to equip themselves with the right tools to maximize these staking opportunities in the market.

Whether it’s to reduce capital entry requirements or to use data analytics to track validators, stakers can find numerous platforms and offerings.

Keep up to date with the various happenings in the crypto market with Solo Stakers!

Frequently Asked Questions

What is the difference between a VM provider and cloud hosting? 

Virtual Machine (VM) providers offer Staking-as-a-Service, managing the technical setup and software for you. In contrast, cloud hosting (like AWS or Google Cloud) provides only the raw digital infrastructure, leaving you responsible for installing and maintaining the node software.

How do dashboards help prevent “slashing” penalties? 

Slashing occurs when a validator goes offline or malfunctions. 

Dashboards provide real-time alerts via Telegram or Discord, allowing you to quickly remediate connectivity issues or hardware failures before the network penalizes your staked deposit.

Can I stake without technical skills or a large amount of capital? 

Yes, through delegation or liquid staking. 

On DPoS networks like Solana, you can delegate any amount to a professional validator. Meanwhile, on Ethereum, liquid staking protocols like Lido let you stake fractions of ETH and receive a “receipt” token (LST) to keep your capital flexible.

Editor’s Note: This article was originally published in March 2024 but has been updated with new information

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