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What Is Staking? The Best Staking Coins
Cryptocurrency has once changed the financial world, and it keeps changing it today. The concept of crypto money is no longer something alien and unusual, it’s a way to gain profit. People keep mining various digital coins, they get together as pools to raise the chances of getting more coins, they invest in digital coins, etc.
But today we have new ways of profiting from cryptocurrency. You don’t even need to buy expensive mining equipment or spend money to invest in currency. All you have to do is to consider the staking option. In this article, you may learn about the concept of staking, what benefits it offers for cryptocurrency holders, and what tokens are the best for staking.
What Does Staking Mean?
The staking concept is similar to gaining a percentage from bank deposits. As you know, you may create a deposit in a bank and gain a certain percentage from that sum. It is considered to be a passive profit and it is surprisingly profitable.
Staking is similar. You can hold a certain amount of coins, lock them, and gain additional coins for locking your crypto savings. The staking process depends on the blockchain system and the purpose is to support the PoS (Proof of Stake) mechanism.
The PoS mechanism needs to choose a proper validator so the mined block will be validated. The proper validator in most cases is a user who has more coins. Even though this means that the decentralization is a bit reduced in comparison to the PoW (Proof of Work) mechanism, it helps lower computing power. As a result, the overall process improves scalability.
When a user locks his funds, he gets revenue, while the blockchain gets help when it comes to the lower computing power. That’s why the concept of staking is so popular recently. But of course, some coins are more popular, others are less used for this purpose.
The Best Coin Options To Stake
Some people might think that the most popular and well-known coins are the best when it comes to staking. It’s not entirely correct. Over the past few years, the concept of staking has become more popular and the list of coins to stake has increased. here are some popular options:
These coins are considered to be the best Proof of Stake coins to gain passive revenue. As you may notice, the list doesn’t have the most popular currencies such as Bitcoin or Ethereum. It’s because they use a PoW mechanism. Now let’s see what to expect from each above mentioned digital currency.
Tezos token is called XTZ. The Tezos blockchain is run by a Proof of Stake mechanism. The stakeholders 9users who have locked their coins) have the right to vote on network changes. Users of this blockchain earn XTZ by locking the crypto money. The process of staking on this chain is called "baking", and stakeholders are called bakers accordingly.
The main thing to bear in mind about this blockchain is that the more XTZ you have, the more influence you have in the blockchain system governance. An annual yield for stacking XTZ is around 5% to 6%
The official token's name is DCR. Decred is a relatively new blockchain system that operates on both PoS and PoW systems. It was launched in 2016 and today it's a pretty good choice for stakeholders. The advantage of the Decred blockchain is hidden in its hybrid nature - it is decentralized, but PoS offers some governance to the stakeholders.
The blockchain offers flexibility. Miners keep processing and validating the transactions due to PoW. Stakeholders may lock their DCR tokens and get revenue, plus they use locked coins to make governance proposals. Another good thing about such a hybrid system is that miners get 60% of the revenue, while PoS users get 30% which is a great passive profit overall.
The name of the token is ATOM. This platform is relatively popular among blockchain app developers since it allows them to develop various apps. It is a new blockchain system which was launched back in 2019. It is operating on the Tendermint protocol and PoS mechanics
To earn ATOM tokens, you need to be a stakeholder. If someone wants to get access to Cosmos, they need to either delegate or run a validator node. In the first case, a user delegates the responsibility to a certain validator node who will stake on the behalf of the user. This validator node charges a fee for doing such a service. The annual revenue validators and delegators get is around 8 to 10 percent.
The official token name is ALGO. It is purely based on the PoS mechanism which is called PPoS. To get the token, users need to stake ALGO. The platform is unique since it solves the problem of users holding maximum governance power by allowing them to get revenue from having 1 ALGO. The estimated annual revenue of staking ALGO is around 5-6%.