Boasting more than 8600 coins, the crypto market has evolved massively over the past few years. Aside from getting a lot more fundamentally powerful, the industry has also seen many new concepts that further reward users.
One of these concepts is staking, a sort of passive income method for those who buy tokens that operate on a proof of stake consensus model. Even those who purchase Bitcoin only are now exploring the opportunities around those tokens, as it offers lucrative forms of passive income that exceed the average interest of a savings account.
In this article, we decided to list 9 of those coins. Over the next few chapters, you will learn which trending coins offer the best passive income, as well as the risks associated with them. Ready to delve in? Let’s get started.
Understanding Staking Coins
Before we delve into our options, it is important to acknowledge the return rates you can expect to receive, as well as the form of coins you will receive them in.
- More popular cryptocurrencies, like Tron (TRX) and Ethereum (ETH) are known to offer lower staking rewards. This is because of the large participation of locked tokens, which divides the monthly rewards across more wallets. Typical staking rewards for these types of coins average 2%-4% APY. On the contrary, less popular staking coins, like Decred, or Tezos offer higher staking rewards. With fewer people involved in the staking process, these coins can often offer up to 50% staking rewards APY. For both cases, staking rewards are paid in the same cryptocurrency.
- But not all rewards are paid in the same currency. Some staking coins reward their users in a different token that is also quite popular and listed on exchange platforms. A good example of this is NEO, which pays its users monthly in GAS. Another one is VeChain, which distributes staking rewards in VTHO. The tokens may be interrelated and listed on the same blockchain, but grow independently from each other.
Best Staking Coins
Knowing this, here are the best staking coins to consider investing in:
- Ethereum (ETH) – Ethereum recently upgraded its blockchain to POS, making it possible for wallets to stake their coins. While the lockup period is lengthier than others, the expected rewards can vary between 4%-10%. Of course, the actual rewards are usually towards the lower side, but it can’t hurt getting paid passively in one of the most popular cryptos of the market.
- Tron (TRX) – TRX is one of the most popular cryptocurrencies in China, and is actively trying to improve where Ethereum seems to lag. The cryptocurrency has been offering staking rewards for several years, but they are usually lower than ETH (1,5%-2%). We like this coin due to its strong community and established reputation.
- NEO (NEO) – Neo is one more cryptocurrency with Chinese origins, and one of the very first coins to attempt the concept of staking rewards. It was very successful and rewarding back in 2017, when its GAS token reached a price of $80 per token. Rewards for the token occur monthly.
- VeChain (VET) – VET is the token that empowers one of the most popular supply management projects that aims to revolutionize the authentication of luxury items. The holders of VET get rewarded each month in VeThor (VTHO) a token that has seen rapid price appreciation over the past month.
- Decred (DCR) – DCR is a POS token that offers some of the highest staking rewards in the industry. At its latest report, the project showed actual staking rewards of 10,2% to all its holders. This size of passive income automatically makes it one of the most luring investment options for those looking to generate cash flow from their cryptocurrencies.
All of the above tokens, as well as the rewarding tokens, are listed in popular cryptocurrency exchanges like Binance.
Yield Farming
Closing, we’d like to briefly touch upon a newer “staking” concept known as yield farming. The term became popular after decentralized exchanges rose to popularity in 2019, and was fully developed over the past year.
The concept is simple. Users buy a certain amount of a particular token and lock it into a smart contract that provides liquidity to the pool of tokens, thus empowering the decentralized distribution of the project’s native cryptocurrency. People who buy and stake tokens in this manner earn anywhere from 20% to 100%+ on an annual basis, paid out daily.
Popular examples of such cryptocurrencies include Binance listed AAVE, SynthetiX, Sushiswap, Compound, and others.
It is important to keep in mind that the price of cryptocurrencies is more volatile when it comes to this option. There is also significantly more risk when it comes to newer tokens that offer this possibility. Decentralized markets are full of projects built by anonymous developers that eventually “pull the rug”, crashing the token’s value and running off with a fat stack of profits.
