A significant amount of financial activity is characterized by individuals and institutions searching for the highest yield — and crypto is no different. This guide covers how staking yields are calculated and the cryptos that offer the most lucrative yield potential. Here is a list of the highest APYs offered from crypto staking.
How staking yields are calculated
Calculating crypto staking yields involves a few key steps, and understanding them can help you estimate the potential returns from staking your crypto.
You need to know the annual percentage yield (APY) offered by the staking program, the amount and time frame you plan to stake, and any potential fees or penalties you may incur for inactivity, slashing, or early withdrawals.
Finally, it’s essential to consider the volatility of the cryptocurrency market. The value of your staked assets can fluctuate, which means the actual value of your yield in fiat currency terms (like USD) could be different at the end of the staking period.
Additionally, in a high-inflation environment, the fiat value of the crypto rewards from staking might decrease. This is because as inflation rises, the purchasing power of the currency falls. If you are earning staking rewards in a cryptocurrency, and that cryptocurrency’s value against fiat currencies decreases due to inflation, then the real-world value of your staking rewards would be lower.
Cryptocurrencies offering the highest staking yields
| Cryptocurrency | Rewards rate | Description |
|---|---|---|
| Injective Protocol (INJ) | 20% | Interoperable smart contract platform |
| Polkadot (DOT) | 14% | Layer-0 protocol that acts as a hub for other blockchains |
| Kusama (KSM) | 12.8% | Canary chain for the Polkadot blockchain |
| Zilliqa (ZIL) | 12.6% | One of the first blockchains to implement sharding |
| Casper Network (CSPR) | 9.4% | Blockchain that focuses on enterprise grade solutions |
| Avalanche (AVAX) | 8.7% | Blockchain that allows for the creation of subnets |
| Canto (CANTO) | 5.9% | Generalized blockchain that comes with DeFi primitives |
| Tezos (XTZ) | 5.8% | Know for its use of liquid proof of stake |
| Polygon (MATIC) | 4.8% | A sidechain and layer-2 to Ethereum blockchain |
Injective Protocol (INJ)
Injective Protocol is an interoperable smart contract platform built using the Cosmos SDK. It is optimized for fast transactions and low transaction costs, boasting block times a fraction of a second.
Additionally, the blockchain is optimized for for financial activities. The Injective Protocol supports cross-chain trading, allowing users to trade assets from different blockchains, such as Ethereum and Cosmos.
• Trust Wallet — Trust Wallet is a multichain web3 wallet that is loaded with a lot of features, inlcluding in-app staking, a browser, and payment providers to purchase crypto in app. Users rarely have to leave the app, as most of their crypto activities can be don in-app.
• Injective Hub — The Injective Hubs is the proprietary website where you can stake INJ directly. It is the primary way to stake INJ for those with limited staking options.
• Keplr wallet — The Keplr wallet is both a browser extension and a mobile wallet. The wallet is a great option for those who need to stake on the go, or would like a wallet that can access.
Polkadot (DOT)
Polkadot is a blockchain protocol designed to enable different blockchains to transfer messages and value amongst each other, sharing their unique features while pooling their security.
It stands out for its focus on interoperability, enabling various blockchains (called parachains) to connect and interact with each other. Polkadot was founded by Dr. Gavin Wood, a prominent figure in the blockchain community and co-founder of Ethereum.
• Binance — Binance is an all in one platform that satisfies many different types of cryptocurrency users. You can stake DOT on Binance, while enjoying many other crypto activities.
• Coinbase — Coinbase is one of the most secure and regulatory compliant exchanges on the market. Users that stake DOT with Coinbase can forego the burdens of staking themselves, to let Coinbase do all the heavy lifting.
• Kraken — Kraken is the premier exchange for cryptocurrency traders. It is also a good option for staking crypto, as it is extremely compliant to regulations in the jurisdictions that it operates in.
Kusama (KSM)
Kusama is often described as a “canary network” for Polkadot, designed to be a testbed or experimental development environment for blockchain projects before they are deployed on Polkadot. Like Polkadot, Kusama offers shared security and interoperability between different blockchains (parachains). However, the risks and stakes are higher due to the network’s experimental nature.
Unlike typical testnets that use valueless “test tokens,” Kusama has its own native crypto (KSM) with real economic value. This setup provides a more accurate testing environment and helps developers gauge how their projects will function in a live economic system.
• Kraken — Kraken is the premier exchange for cryptocurrency traders. It is also a good option for staking crypto, as it is extremely compliant to regulations in the jurisdictions that it operates in.
• Trust Wallet — Trust Wallet is a multichain web3 wallet owned by Binance. It is loaded with a ton of features, inlcluding in-app staking, a browser, and payment providers to purchase crypto in app.
• Coinbase — Coinbase is one of the most secure and regulatory compliant exchanges in the market. Users that stake KSM with Coinbase can forego the burdens of staking themselves, to let Coinbase do all the heavy lifting.
Zilliqa (ZIL)
Zilliqa is a blockchain platform known for being one of the first to implement sharding, a technology that enhances the scalability of blockchain networks. The project originated from academic research at the National University of Singapore, highlighting its strong foundation in rigorous academic methodologies.
Zilliqa supports the development of decentralized applications. Its high throughput and scalable architecture make it a suitable platform for developers looking to build dApps that require fast and efficient processing of transactions.
• CEX.io — CEX.io is a popular exchange that is packed with features. Some of these include buying and selling, a crypto debit card, and ZIL staking.
• Binance — Binanace is the world’s largest exchange by volume, and therefore has deep liquidity. The exchange allows you to stake ZIL, among other cryptocurrencies.
Casper Network (CSPR)
Casper Network is a blockchain platform that focuses on enterprise-grade blockchain solutions, aiming to address some of the key challenges in blockchain adoption for businesses and industries.
One of Casper’s primary goals is to make blockchain technology more accessible and applicable for businesses. It provides features such as upgradable smart contracts and predictable gas fees, which are particularly important for enterprise use cases.
• Uphold — Uphold is a U.S. based exchange created by the founder of CNET. Staking CSPR on Uphold has the benefit of being regulated in the U.S.
• Casper website — As it is the proprietary method for staking CSPR, staking on the Casper website is a good option. For those who do not require other services offered by CEXs, staking CSPR natively is a good option.
Avalanche (AVAX)
Avalanche is a high-performance, scalable blockchain platform designed for a wide range of decentralized applications and custom blockchain networks. It’s particularly noted for its speed, low transaction costs, and eco-friendliness.
The platform allows for the creation of both private and public custom blockchain networks. These networks, called “subnets,” can have their own rules, participants, and use cases, making Avalanche highly versatile for different applications.
• Avalanche wallet — The Avalanche wallet is the proprietary wallet of the Avalanche ecosystem. If you do not require the services of staking platforms, it is the way to go.
• Binance — Binance is a world renowned exchange packed with tons of features. On the platform you can buy, sell, trade, and most of all stake AVAX.
• Ankr — The Ankr platform provides web3 infrastructure for developers. Staking with Ankr streamlines the process for users.
Canto is a relatively newer entrant in the blockchain space, focusing on decentralized finance (DeFi). It distinguishes itself through its unique features and offerings tailored for the DeFi ecosystem.
Canto presents the idea that fundamental DeFi primitives ought to be available as free public infrastructure. This means that certain fundamental DeFi services like decentralized exchanges (DEXs), the native crypto, a token that operates similarly to a stablecoin, and lending services are offered out of the box, aiming to reduce the cost barriers typically associated with DeFi operations.
• Bitget — Bitget is crypto exchange that strays from the norm by offering niche features. Some of these features include copy trading, trading bots, and staking.
• Canto website — The Canto website is the proprietary way to stake CANTO. Users that do not need the features of other staking options can stake natively on the website.
Tezos (XTZ)
Tezos is a blockchain network that supports smart contracts and offers a range of features that differentiate it from other similar platforms. Like Ethereum, Tezos is also a platform for smart contracts and decentralized applications (DApps).
Tezos uses a Liquid proof-of-stake consensus mechanism. In this system, token holders can participate in the consensus process as a “delegator” or a “baker.” Delegators can “delegate” their tokens to bakers, who are responsible for maintaining the network and creating blocks.
• Trust Wallet — Trust Wallet is packed with features, including an in-app browser, staking, and crypto trading. If you need a wallet with multiple features, including staking, it is the way to go.
• Zengo — Zengo is a wallet that has been modernized to include more safety options. You can stake XTZ from the comfort of your Zengo Wallet.
• Coinbase — Coinbase is a very popular and safe exchange, that gives a particular focus to regulatory compliance. Staking XTZ with Coinbase is a safe option for those who are not technically savvy.
• Kraken — Kraken is the premier exchange for traders, as it has more options for advanced traders. Staking with Kraken allows traders to put their funds to work when they are not trading.
Polygon (MATIC)
Polygon (previously known as Matic Network) is a multi-chain scaling solution for Ethereum, designed to address some of Ethereum’s major limitations. Polygon is fully compatible with the Ethereum blockchain.
It extends Ethereum into a multi-chain system, allowing Ethereum-based projects to easily migrate to Polygon for better performance while still staying connected to the Ethereum mainchain.
• Coinbase — Coinbase is one of the safest exchanges in the market to stake MATIC. If you are worried about staking in the wild west that is DeFi, Coinbase should give you some peace of mind.
• Lido Finance — Lido is gaining market share in the realm of liquid staking derivatives. Staking with Lido allows you to put your idle stake to work even more.
• OKX — OKX is a global exchange that caters to a diverse user set. It is a great option for those in different parts of the world who have limited staking options.
• Kraken — Kraken is a U.S. based exchange that has been on the market for a long time. It is a great option for users that want to stake, especially without the required technical know how.
Staking strategies for maximizing APY
To maximize your staking returns, you will need to devise and implement a solid strategy. Not all strategies will apply to all protocols, but there are a few that may work across the board.
1. Choose the right asset
First and foremost, a good staking strategy starts with choosing the right top staking coins. Ideally, this means choosing a profitable coin or token with a simple staking process or minimal staking requirements and upkeep and a high annual percentage yield (APR).
As stated previously, some cryptocurrencies have a reward rate that is offset by the inflation rate and price performance. For example, if you receive a 5% annual reward rate on your crypto, but the price of your crypto diminishes, then the real reward rate on your crypto diminishes.
It is also important to remember the staking ratio of any particular protocol. This will tell you the usage of how many people are staking.
Take this into account with a coin or token that has a high inflation rate, and you could be looking at a recipe for disaster.
2. Learn the staking mechanism
You will also need to understand the protocol and the staking mechanism of the cryptocurrency. Some cryptocurrencies stake at the blockchain level (coins), while others stake at the DApp level (tokens). Some blockchain protocols also have slashing mechanisms or are pure proof-of-stake, nominated proof-of-stake, delegated proof-of-stake, and so on and so forth.
The key takeaway is that some staking mechanisms have risks or are more complex and require a lot more technical ability. For instance, Ethereum staking requires technical ability and industry knowledge. Typically, stakers require order flow auctions to compete or are block producers with integrated relays to capture MEV.
3. Compound your rewards
Once you receive staking rewards, you can simply reinvest them to compound your earnings.
On the other hand, you could also stake on liquid staking derivatives (LSD) platforms and take the LSD to another platform or DApp to stake as a type of yield farming strategy. This significantly increases the staking benefits of holding a coin or token.
However, the yield farming is a more risky decentralized finance (DeFi) strategy. Imagine a scenario where the node that operates your portion of a stake goes offline, the protocol slashes them, and burns a portion of the stake, kicking them off of the network. That LSD token that you hold is now undercollateralized.
4. Join a staking pool
If direct staking has high minimum requirements or technical barriers, consider joining a staking pool. Staking pools aggregate the resources of multiple stakeholders, making it easier to participate and sometimes offering better rates.
Staking requires lock ins & some degree of expertise when participating in consensus So it is not exactly suitable for everyday use or everyday users.
Justin Bons, blockchain investor: X
Some staking platforms, including centralized exchanges, offer services that allow you to pool your resources. There are also DApps that allow you to stake in pools. Keep in mind that these pools may have a minimal staking period. This is to maintain platform security and liquidity.
5. Diversify your portfolio
As the saying goes, never put all your eggs in one basket. Diversification can help manage risk. Instead of staking all your funds in a single cryptocurrency, consider spreading your investment across different assets and staking pools.
Regularly monitor the performance of your staked assets. Be prepared to rebalance your staking portfolio in response to changes in reward rates, network conditions, or the broader crypto market. You can also choose different staking platforms if you are not very technical.
The best bang for your buck
The best part about staking is that you can earn rewards on your idle assets. Choosing the highest APY crypto staking allows you to own assets that pay you to own them — giving you the best bang for your buck. Always remember to have a clear strategy in place and ensure you understand the risk involved. As always, never invest more than you can comfortably afford to lose.
Frequently asked questions
The minimum requirement for staking depends on the blockchain protocol. For example, the minimum amount to stake on Ethereum is 32 ETH; however, it is typically suggested to stake a little more just in case. On the other hand, Tezos requires you to hold any amount of XTZ to stake.
Staking reward payouts depend on the blockchain protocol. Some cryptocurrencies pay out automatically, while others require a bonding or lockup period before you can exit. In the latter scenario, payout periods are entirely up to you after the timing threshold has been met.
Depending on the geographical region that you live in, staking rewards may be taxed. Participants should consult tax advisors in their local countries, or states if they are in the U.S. In the U.S., staking is typically taxed as ordinary income.
The unstaking process for cryptocurrency may vary by blockchain network. Some protocols require bonding periods where you must lockup your crypto for a certain amount of time before you can unstake. This is to avoid any security or network stability issues that may arise.
The crypto with the highest staking rewards depends on a few factors. Markedly, price, reward rate, and inflation rate. In general, Ethereum offers the highest staking rewards, but most of this profit can come from transaction fees rather than staking in of itself.
In general, Ethereum provides the highest rewards for staking. However, most of this comes from transaction fees rather than staking itself. Cryptocurrencies like Injective Protocol offer high staking rewards, but the significantly lower price of each token means that other protocols could be more profitable to stake.
The best staking platform depends on the user. If you do not have a high degree of technical knowledge, a centralized exchange like Coinbase or Kraken may be your best option for staking. However, it should be noted that staking platforms introduce counterparty risk and staking yourself has certain benefits of delegated staking.
Whether or not crypto staking is safe largely depends on the protocol. In general, staking is considered one of the safer cryptocurrency activities. However, users should keep in mind that there may be risks associated with certain staking implementations.
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