Cryptocurrency

Which Coins are Good for Staking?

Cryptocurrency staking is one of the best ways to generate passive income from your crypto investments. Without having to cash out on your coins, you can rake in rewards while having the satisfaction of knowing you’re helping to make the blockchain safer.

But if you’re new to the non-custodial staking scene, you may wonder which coins you should choose to stake. In this article, we answer this exact question and also provide you with some important criteria to keep an eye out for when choosing a coin to stake. 

What is Staking?

Crypto staking is a process by which you can passively generate income from your purchased coins. It involves locking your assets for a given period to help verify blockchain transactions and receive rewards in return.

Many blockchain networks use a proof-of-stake consensus mechanism. This means that network users who are interested in adding new blocks to the chain must validate transactions through staking. 

How to Choose a Coin for Staking

With that being said, how can those interested in staking cryptocurrency know which coins are best for the job? What variables should you keep in mind when trying to choose the best coin for staking?

Here are just a few points to consider when deciding on an asset to stake:

  • Inflation rates: If a coin has high inflation rates, you’re better off steering clear. While it’s possible you’ll reap high rewards in the short-term, such volatile coins are rarely a good long-term investment.
  • Coin supply: As a rule, it’s best to stake a coin that has a limited market supply. Doing so ensures that there will always be a demand for the asset on the market, which in turn helps to boost the coin’s value.
  • Transaction validation method: As mentioned above, many blockchains use a proof-of-stake consensus mechanism to validate transactions—but not all. Some blockchains, such as the Bitcoin network, use a proof-of-work consensus mechanism instead. These coins are unfortunately not eligible for staking.

Five of the Best Coins for Staking

Now that we’ve covered what qualities to look out for when trying to choose a coin to stake, we’ll now provide you with a few options for your consideration. The coins listed below are some of the most lucrative on the market in terms of staking. 

Keep in mind that whether or not you’re able to make a profit from staking depends not just on the coin, but also on market movements, your chosen platform, and how long you stake the asset.

Ethereum

The Ethereum network is one of the most popular to date. Its native cryptocurrency, Ether, is the second-largest digital coin in the world after Bitcoin.

Up until recently, Ethereum used a proof-of-work consensus mechanism; however, the network is currently in the final stages of switching to a proof-of-stake consensus mechanism. This means it will soon be eligible for staking—and will no doubt prove one of the most popular options out there due to the popularity and value of the coin. 

Solana

The Solana blockchain is popular for its fast transactions and low costs, both of which contribute significantly to its impressive market performance. Over the course of 2021, its value rose over 500% from around $18 to $100.

Since the beginning of 2022, the value of Solana has dipped—unsurprising, given the tumultuous state of the market. Nonetheless, the coin remains popular among developers and is still a solid choice for staking.

Polkadot

The Polkadot network runs on something called a nominated proof-of-stake consensus mechanism. This means that nominators back transaction validators and can suffer a loss if a nominator they’ve backed proves to be malicious.

That being said, Polkadot remains a popular staking choice as it usually pays out quite handsome rewards.

Cardano

Cardano’s popularity is largely due to two factors: its scalability and sustainability. Eco-friendly blockchain networks represent not only a greener future for cryptocurrency but also lucrative opportunities for investors. 

What’s more, Cardano recently released a smart contract functionality. This boost in applicability is only likely to increase its value further.

Cosmos

A relatively new blockchain, Cosmos has already begun to gather interest from lots of investors. Compared to a few other entries on this list, its native coin ATOM is a little more expensive, sitting at around $10. That being said, it’s still affordable, so you can stake it without worrying about breaking the bank.

Conclusion

Staking can be an effective way of earning a little money on the side without even having to lift a finger. The main trick is knowing what coins make good staking investments.

This article has explained how to determine what currencies are good for staking and has provided a few popular examples. If you’re looking to start crypto staking, following the advice set out here will put you on the right track.




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