If you know how Bitcoin works, you probably are well aware of the fact that every blockchain uses some kind of consensus mechanism for transaction validation. Some of the most commonly used consensus mechanisms are Proof-of-Work (PoW) and Proof-of-Stake (PoS). Whosoever participates in the process of transaction validation is incentivized.
On a proof-of-stake blockchain, the token holders can actively participate in transaction validation and the process is known as staking. Anyone with a minimum-required balance of a particular PoS cryptocurrency can participate in transaction validation and can earn rewards. In simple words, it is just like receiving interest on the money you hold in your bank account. Is your staking coins list for 2020 ready?
In most cases, you can stake your coins using exchange-based staking services or stake your coins from your crypto wallet. Staking not only allows you to earn rewards for staking your coins, but it also gives you some decision power on the network. Thus, when you stake coins, you can participate in network governance too.
How to choose the top staking coins
Staking can help you earn passive income on your crypto investments. Not a lot of parameters need to be weighed before you make your list of best staking coins. However, there is a lot of data scattered around the space and might confuse you.
In this article, we have hand-picked the 5 best coins to stake based on:
- The credibility of the project
- Minimum staking amounts
- Staking rewards
- Staking reward payout frequency
Here is what makes these assets most attractive in 2020.
Now Token is our top pick in the crypto staking coins. As a utility token of the non-custodial cryptocurrency exchange ChangeNOW, it is the first token that was listed on Binance Chain. Being established in 2017, ChangeNOW earned itself a good market reputation in the last 3 years. Currently, the platform supports over 170 cryptocurrencies and also accepts fiat mode of payment.
Interestingly, ChangeNOW is uniquely placed in the market. That is because there is no maximum trading limit on cryptocurrency swaps.
Why stake NOW?
The project survived the bear market and is here to stay. To top that it is a highly credible project with a promising future and an interesting staking model. To explain it further, staking NOW is cool because it offers progressive rewards to the stakeholders.
In simple words, if you stake longer, you earn more.
0% < 1 week
5% – 1 week – 1 month
10% – 1 month – 6 months
15% – 6 months – 1 year
25% – 1 year and more
Minimum Staking amount – 10 NOW
Reward Frequency – Weekly
The NOW staking mechanism is programmed to reduce inflation and increase the demand of NOW tokens. It achieves so by halving the rewards after every 1,500,000 NOW distribution and that makes it one of the best PoS coins for staking.
Tezos is a delegated proof of stake (DPoS) blockchain, built from scratch. The mission is to create a blockchain that embraces innovation without a hard fork. Just like Ethereum, it allows smart contacts but it uses a community-driven consensus mechanism to validate the transactions.
It has been around for over 3 years now. However, it has had its share of lawsuits and fights. But all is settled now. Hands down Tezos is one of the leaders among the best proof of stake coins. Its community loves staking Tezos and instead of staking they call it baking.
Why stake Tezos?
The project has survived the worst and has proved its potential to the community. More importantly, delegating Tezos is very safe. That’s because the investor is in complete control of his private keys. Along with the rewards, the baker also earns some voting power.
Approximately 6.20% annually
Minimum Staking amount – 8,000 Tezos
Reward Frequency – After every 3 days
However, if you are staking Tezos for the very first time, you need to wait 35 days for the staking to be approved. Once its approved, you will receive the rewards after every 3 days.
Cosmos was one of the most popular projects of 2019 as its mainnet went live after 3 long years. The project has grand ambitions. It aims to build an interoperable ecosystem of connected blockchain and has the potential to become the internet of blockchains.
Cosmos blockchain uses Tendermint to achieve consensus. Currently, it offers two options to earn staking rewards and is one of the leading projects on any proof of stake coin list. One can choose to run a validator node or delegate Cosmos to a validator node. By running a validator node, one can get a 10.03% annual reward which is almost 0.80% more than the delegator reward. But running a validator node in itself is a complex job.
However, by delegating ATOM, one can easily start earning staking rewards but the risk is more.
Why stake ATOM?
The ATOM staking yield depends on the total staked ATOM, proposed inflation, and block time. According to the official website, the yield ranges between 7% to 20%. The delegation and reward generation is effective immediately and that’s why ATOM is one of the top Proof of stake coins in our list. In case you choose to delegate your ATOM, the validator might charge a commission before distributing the rewards.
Approximately 9.23% annually
Minimum Staking amount – No minimum amount of ATOM
Reward Frequency – varies as per the validator
If you choose to undelegate your ATOM, you will have to wait for 21 days to receive the undelegated ATOM.
Algorand blockchain uses Pure Proof of Stake (PPoS) consensus to validate the transactions. As an ambitious blockchain project, it aims to enable a borderless economy on blockchain. Along with that, it aims to solve the blockchain trilemma by achieving scalability, decentralization, and security.
The Algorand network also supports the building of decentralized applications (dApps). That sounds quite promising for the dApp builders as it offers a throughput of 1,000 TPS.
Why stake ALGO?
In 2019, Algorand announced a 200 million ALGO staking rewards program with a minimum of 100% return. The minimum staking amount for the same was 25 ALGO. Initially, the rewards of the staking program were close to 14.39%. Unfortunately, the registration reward program for this program ended on August 31, 2019. However, you can still stake your ALGO immediately via wallets like Exodus.
Approximately 5.36% annually
Minimum Staking amount – Minimum wallet balance
Reward Frequency – Every 20 minutes
As an Ethereum based project, Synthetix builds synthetic assets based on stocks, bonds, cryptocurrencies, fiat currencies, and more. Each synthetic asset on Synthetix is an ERC-20 asset and will be backed by SNX (Synthetix Network Token). Currently, it ranks on #8 for the total value locked (TVL) in DeFi.
Why stake SNX?
Synthetix network introduced staking rewards in March 2019. It is used as a mechanism to involve the community in the system. The SNX holders need to lock their tokens as a collateral. Against the value of locked SNX, Synths are minted. These Synths are traded on Synthetix Exchange and they generate fees. This fees is then distributed to the SNX stakers as staking rewards.
Approximately 29.28 % annually
Minimum Staking amount – No minimum staking amount but 500 SNX is recommended
Reward Frequency – Weekly.
To wrap up:
Now that you have all the details of the best PoS coins for 2020, it is easy for you to understand what is staking a coin and what are the benefits of doing so. Alt-season for 2020 has just begun and this is the best time to stake your holding and earn maximize your passive income.