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Top 5 Cryptos for Staking in 2022
While most of crypto’s history has been about getting returns in the market by buying crypto assets low and then later selling them at a higher price, 2021 saw an explosion of new ways in which users are able to earn a return on their crypto holdings.
While decentralized finance (DeFi) stole most of the headlines, the reality is that 2021 was also the year when proof-of-stake (PoS) gained increased attention as a potential alternative to Bitcoin’s proof-of-work (PoW). In PoS, traditional PoW miners are replaced with holders of a particular cryptocurrency who choose to stake their holdings in return for block rewards. Much of the hype around PoS more recently has been due to the upcoming switch by Ethereum from PoW to PoS; however, the reality is this method of blockchain consensus has its roots in a white paper from August 2012, which was then used as the basis for Peercoin.
While Ethereum has not completed its move to PoS quite yet, there are a number of other PoS-based crypto assets already on the market. These crypto assets are effectively a way to earn dividends for participating in the consensus process of a particular blockchain, so let’s take a look at five of the best options for crypto staking in 2022.
1. BNB
BNB is one of the more well-known projects in the crypto space due to its close connection with cryptocurrency exchange Binance. While it was originally launched as a sort of pseudo-stock for Binance that was intended to grow in value as the exchange became more popular, the crypto network has started to push towards more decentralization and offer a wide variety of new features, such as a smart contracts platform that is compatible with the Ethereum Virtual Machine (EVM), to increase the value proposition of the underlying BNB crypto asset over time. Due to the decision to accept a higher degree of centralization in its network, BNB has been able to become more active than Ethereum and is one of the easier assets for crypto newcomers to stake.
There are dozens of different validators to choose from when it comes to staking BNB, and the highest available APR is currently 8.69%. However, users can also find higher rates of return (up to 27.49%) when staking via the Binance crypto exchange for smaller denominations of BNB. The lock-up period for staking BNB is seven days, but the higher rates available via the Binance Vault involve longer lock-up periods.
The most important aspect of BNB’s tokenomics is the burn process. Every three months, Binance takes 20% of their profits to buy BNB on the open market and then burn those purchased coins, meaning they become unusable and are effectively removed from the total supply. The BNB price has been roughly flat over the last six months, dropping from $401.62 to $394.50. Of course, anyone staking during that time would have made up for their slight losses through staking rewards.
The best option for staking BNB is going to be the Binance Vault, as Binance itself is still an integral part of this crypto network. Binance will also be the most user-friendly option, but it’s important to remember that this is a custodial solution. If you’d like to get a bit more technical and take custody over your own coins, then Binance Wallet for the Chrome browser is going to be your best bet.
2. Terra (LUNA)
Terra is a crypto network focused on the creation of stablecoins, and the native crypto asset is known as LUNA. Notably, the stablecoins issued on the Terra network are not backed by fiat currency held in various bank accounts around the world. Instead, stablecoins are issued based on LUNA collateral.
The staking rewards available on the Terra network depend on whether you are operating as a validator or delegating your stake to someone else on the network. Validators are able to earn 10% APY on their stake, while delegators earn 7%. It should be noted that operating as a validator on Terra can be difficult, as only the top 100 validators on the network (in terms of staking size) receive any staking rewards. The lock-up period for staking LUNA on the Terra blockchain is 21 days.
The current supply of LUNA is 364,654,834.62 and the total supply is 1,000,000,000. The total supply is dropping however as there are regular LUNA burns. While the rest of the crypto market has had its ups and down over the past six months, LUNA has performed well, climbing from $29.04 to $99.69.
The easiest and most straightforward way to stake LUNA is via the Terra Station Wallet, which is as close as you can get to an official wallet for this blockchain. In terms of user-friendliness, the Terra Station Wallet is not necessarily the easiest to use since it is purpose-built for Terra and you may not be able to use another cryptocurrency wallet that you’ve already downloaded in the past. That said, there are also custodial staking options available for LUNA on exchanges. Trust Wallet also offers options for staking LUNA.
Learn more about Terra (LUNA).
3. Solana (SOL)
Next to BNB, Solana has done the most in terms of challenging Ethereum’s claim as the top platform for smart contracts, DeFi, and NFTs. And much like BNB, Solana is also closely connected to another crypto exchange in the form of FTX. Solana’s main claim to fame is the massive amount of transactions it can process per second (around 64,000), which allows it to offer extremely low transaction fees at a time when complaints about Ethereum gas fees are running rampant on social media.
Currently, the annual reward for staking SOL as a delegate is 5.85%, while validators are able to earn 6.48%. The lock-up period for staking SOL on Solana is variable, but it’s usually between ten or twelve days. Of course, you can also avoid these lock-up periods by opting for a custodial staking option at an exchange like Kraken. Or liquid staking on something like Lido.fi or Marinade.finance.
There will only ever be 489 million SOL tokens in existence, and the current circulating supply is just over 318 million. The SOL inflation rate was initiated at 8%, but this rate will decline on an annual basis until it reaches 1.5%. It should be noted that 16.23% of all SOL tokens were distributed to those who participated in an initial seed sale. Roughly 20% of the total supply was also sold in other various sales at the beginning of this project’s existence.
It should be noted that while Solana enjoyed a breakout year in 2021 overall, SOL price has dropped drastically over the last six months going from a high of $260 all the way down to $85 (in part thanks to significant outages). Still Solana is an excellent candidate for a bounce back thanks to its impressive technology and developer support.
Solana’s focus on ease-of-use extends to the staking process, as the most well-known Solana wallet, Phantom, is a perfect option for staking. There are also ways to stake SOL in your Ledger Live Wallet if you prefer to use that software along with your hardware wallet.
4. Polygon (MATIC)
While Ethereum has been left off this list for now due to its lack of full PoS at this point, there is a PoS project related to Ethereum that achieved strong success last year in the form of Polygon. Polygon came to prominence in 2021 due to its ability to act as a sort of sidechain to Ethereum and carry some of the extra load that had come onto the network thanks to the popularity of various DeFi and NFT apps. While Polygon is closely associated with the Ethereum ecosystem, it still has its own token in the form of MATIC. This MATIC token can be staked to participate in the Polygon governance process.
Those who wish to stake MATIC as a full validator currently receive a reward of 8.68% per year, while delegates receive 7.98%. The lock-up period for both delegates and validators on Polygon is 21 days.
Rewards for staking MATIC generally vary from 8% all the way up to 14%. It depends on how much of the total supply of MATIC is staked at the given time. For instance right now a total of 41% is staked, which equals a reward rate of roughly 9.4% for stakers.
MATIC operates as an ERC-20 token on Ethereum, and it is used to pay for gas on the Polygon platform, in addition to staking. There is a maximum supply of 10 billion MATIC, with the current circulating supply around 7.66 billion MATIC. The MATIC price has experienced a bit of growth over the past six months, going from $1.32 to $1.50.
Polygon benefits tremendously from its close association with Ethereum, as it’s extremely easy to apply a variety of Ethereum tools directly to the Polygon network. For example, Polygon users are able to stake MATIC via the MetaMask wallet, which is well-known as the most popular Ethereum wallet on the market today. This is achieve through a MetaMask plugin that works with the default MATIC Web Wallet. While the connections to Ethereum are helpful here, it can still take a little while to figure out how to get the connection between the MATIC Web Wallet and MetaMask to function properly.
Learn more about Polygon (MATIC).
5. Stacks (STX)
Although Stacks is much smaller than the other projects on this list (at least in terms of market cap), it is also focused on bringing more flexible smart contracts to the world’s most liquid and popular cryptocurrency: bitcoin. While there are other Bitcoin layer-two networks that don’t have their own tokens, such as RSK and the Lightning Network, Stacks has taken the unique route of creating a token for a secondary Bitcoin protocol layer that rewards stakers in bitcoin rather than the newly-created crypto asset. In other words, STX is a crypto asset that yields bitcoin to those who decide to stake it.
Currently STX is estimated to yield roughly 10% per year to those who stake on the Stacks blockchain; however, the exact yield changes on a regular basis based on network conditions. The lock-up period for staking STX is 2000 blocks, which should take roughly two weeks. Notably, the Stacks community refers to staking as “stacking” because STX is used to accumulate more bitcoin rather than more STX.
In addition to stacking, STX is also used to pay for transaction fees and the execution of smart contracts on its own blockchain. Notably, STX was originally issued as a security after gaining approval from the SEC in the United States. The largest chunk of tokens, close to 30%, were awarded to those who participated in the 2017 STX token sale. Much like Bitcoin, Stacks uses a gradually decreasing issuance model when it comes to STX distribution, and there will be roughly 1.818 billion STX in circulation by 2050.
The best option for staking STX on your own is the Hiro Wallet, but it should be noted that staking without a pool requires a minimum of 100,000 STX to get started. In terms of non-custodial staking options via a pool, Xverse Pool is a solid option with the Xverse Wallet. There are no fees associated with this pool, but the minimum STX amount for staking is 500. The Xverse Wallet makes the staking process extremely simple from your iPhone or Android device.
