7 Best Crypto Staking Platforms to Use in 2023
crypto staking
Cryptocurrencies are the most exciting asset class to have emerged on the world markets in a long time, capturing a significant proportion of investors’ interest. A large part of the interest around them is down to earning a passive income with staking, so what’s the best staking platform to do that?
Before answering that question, it’s important to find out exactly what staking is and clear up the many misconceptions surrounding the word. It’s crucial to blockchain technology and plays a vital role in several major networks, including Ethereum, but not every form of staking is actually staking.
So, let’s figure out what crypto staking means and examine how and where you can get the highest APY through the best crypto staking platforms.
What is Crypto Staking?
Crypto staking is a term that is often misunderstood and tends to be generalized to mean a way of earning passive income or rewards on your crypto. Many so-called staking platforms advertise yield and compete with one another for your deposits.
In its purest form, staking crypto means locking up coins native to a blockchain into the protocol as a bond. By doing this and concurrently setting up the correct hardware and software, you can position yourself to become a blockchain validator.
A validator is to a proof-of-stake (PoS) blockchain what a miner is to a proof-of-work (PoW) blockchain such as Bitcoin. Validators use their hardware to help secure the network by producing and validating blocks, and therefore play an extremely crucial role with respect to PoS chains.
Unfortunately, becoming a validator isn’t for everyone. For one thing, there are the technical requirements to set up and maintain your hardware or node, and many blockchains also require a minimum stake. In the case of Ethereum, that’s 32 ETH, which is rather steep.
Some blockchains use a delegated PoS system, where holders of small amounts of crypto can still earn rewards by delegating their coins to validators. This is often also referred to as “staking.”
Decentralized Finance, or DeFi, also features a form of staking. Decentralized exchanges tend to use liquidity pools containing tokens that users trade against. You can deposit or stake your tokens to these pools and earn a share of the fees they generate on the best DeFi staking platforms.
And then there are centralized, custodial staking platforms. Some actually stake the tokens you deposit and help to secure the network. Others simply take your tokens and pay you some sort of “staking” APY.
The best crypto staking platforms can but don’t necessarily stake your crypto. Instead, they search for the highest possible yield by whatever means necessary and pay you the yield that was promised.
Benefits of Crypto Staking
There are significant benefits to staking crypto. When actually staking on a PoS blockchain or delegating to a validator on a DPoS blockchain, you’re helping secure the network and contributing to its growth.
Let’s take a look at some of the other benefits of crypto staking:
- Inflation. A lot of DPoS blockchains coins have an inflationary economic model. The inflation is paid to stakers and delegators, so by staking, you are keeping up with inflation and not losing to it.
- Passive income. Even though inflation means your share of the supply stays the same if you stake, cryptocurrencies tend to appreciate fast. What’s better than getting paid in an appreciating asset for doing no work at all?
- Lock-ups. While this may be a downside for active traders, many investors have a strategy of holding long-term but fail to execute it. It’s far too easy to jump the gun and take profit too early, and many staking systems don’t allow this because of mandatory token locks for certain time frames.
How to Stake Cryptocurrency
How to stake crypto depends greatly on what coin you’re trying to stake and how you want to stake it. Ether, for example, is a very difficult coin to truly stake for the average holder. Still, almost every staking platform accepts it in one way or another.
Staking (or delegating) on DPoS blockchains or staking various ERC-20 tokens are the most common forms of on-chain staking for most users. In either case, you’ll need a non-custodial wallet for the blockchain and some quantity of the coin or token you want to stake, along with some coins to pay for gas if required.
For instance, let’s say you’d like to stake ILV, the utility token of Illuvium, on the Ethereum blockchain. You’d need a non-custodial Ethereum-compatible wallet such as Metamask or the GameStop Wallet, some ILV tokens to stake, and ETH to pay gas fees.
Then, you simply connect to the Illuvium staking portal, connect your wallet, choose your lock-up terms, and hit confirm. Your wallet will prompt you to sign the transaction, and voilà!
As simple as this process may sound, it can still be intimidating to many, if not most, users. A lot of staking platforms, especially crypto exchanges, can be considered easier since the processes involved are more familiar to Web2 users.
You can sign up for most of the best crypto staking platforms using an email address or phone number, and if you pass any initial verification and KYC processes they have (some don’t), you’re good to go. Then it’s just a matter of moving coins onto the platform or even buying directly from them and navigating to the right portion of the site.
How to Choose a Crypto Staking Platform
Choosing the right form of crypto staking is paramount, especially in hindsight. During the crypto bull run of 2021, euphoria was the name of the game, and crypto was an asset class that could only go up. Aside from scams, real horror stories were few and far between, with Mt. Gox a fading reminder of what can happen.
2022 changed all that. Terra’s decentralized stablecoin protocol collapsed, as did its decentralized staking protocol, Anchor, which was offering a very attractive 20% APY on a USD stablecoin.
It turns out that Anchor was so attractive that various centralized staking platforms were using it too, offering their own customers a massive (but less than 20%) yield on USD, converting that into Terra’s UST stablecoin, and depositing it in Anchor to pocket the difference.
Out of Celsius, BlockFi, and Nexo, once considered the “big three” of non-exchange staking providers, only Nexo remains. The FTX exchange and Voyager are also gone, and plenty of other custodial firms are still feeling the heat. Hindsight is a wonderful thing, and it proves that chasing the highest yield doesn’t pay.
The primary concern when choosing the best crypto staking platform or a method of staking, therefore, is safety. Depositors somehow seem to come last when it comes to bankruptcy proceedings, and guarantees of safety by these same firms appear to have meant nothing.
As such, it’s wise to figure out exactly how a staking platform is generating the yield they advertise. Bitcoin, for example, can’t be staked. Any yield being offered on it is likely due to fees, and the platform may be taking your Bitcoin and lending it out to short sellers, who pay a fee for the privilege of using your own investment against you.
Once you’re satisfied that your staking vehicle of choice is safe, you should look into how transparent they are, what their regulatory situation is, and what their fees and withdrawal schedules are like.
7 Best Crypto Staking Platforms
While safety is paramount, capital efficiency and earning yield on your assets are extremely important. Many cryptocurrencies were designed with yield in mind to incentivize staking, so expecting a reasonable return isn’t out of the question.
Here are some of the best staking options, including the best crypto staking platforms available today:
#1. Native staking platforms
The most productive way to stake a cryptocurrency is to do so as designed. That’s how you can guarantee the best possible returns, since there isn’t an intermediary around to take a cut if you’re doing so. In fact, you may have a right to be suspicious when a given platform offers returns that outstrip the actual staking APY of the network itself.
Staking to the protocol also means that you’re playing a part in decentralizing the network, which is the entire point of the blockchain.
The way to stake each coin or token may be different. As in Illuvium, which was mentioned previously, the project’s website could have a staking section that you can connect to. Some wallets, such as Cardano’s Daedalus wallet, have a section where you can stake your coins easily.
Staking coins and tokens in this manner generally may be subject to a gas fee, as with any blockchain transaction. If you’re delegating coins to a validator, the nope operator will also charge a small fee since they do have costs in terms of operating node hardware.
#2. Lido DAO
Ethereum is one of the most popular cryptocurrencies and has utility surpassing even that of Bitcoin. It hosts a vast ecosystem of decentralized applications and has both been battle tested for over 7 years on the market and survived the challenge posed by plenty of so-called “Ethereum killers.”
Therefore, the ETH coin is one of the most popular cryptocurrencies and makes up at least part of most crypto investors’ portfolios. As mentioned, however, it’s very difficult to stake. The Lido staking platform is a decentralized staking platform that exists on Ethereum itself, and it allows you to stake as much Ether as you want without worrying about minimums or node hardware.
Even better, you receive a staking token, stETH, which is liquid. This is an important distinction since ETH can’t be unstaked and used elsewhere. StETH, on the other hand, can be used to maximize capital efficiency via DeFi and collateralize loans from MakerDAO. You can also just sell your stETH if you want to exit your staking strategy, which is something you can’t do with native ETH staking.
Rocketpool is another decentralized option for ETH staking without being subjected to the 32 ETH minimum. If you want to stake more cryptos, Lido may remain a go-to since it also offers SOL, MATIC, DOT, and KSM staking as well as ETH.
#3. Binance
Binance is considered by many to be the world’s leading cryptocurrency exchange and features a massive crypto ecosystem. The ecosystem includes its own blockchain, the DeFi network, and the BNB coin, which is one of the market’s most capitalized.
The BNB Chain is one of the best and most popular alternatives to Ethereum regarding dApps, although it lags behind in terms of decentralization, and the Binance exchange is available in most countries. Note that Binance.us is a separate entity from Binance.com, the flagship global exchange.
Binance.com offers a vast selection of coins and tokens you can earn yield on, and different time-frames for locking earn different yields. It’s also possible to choose unlocked or more liquid forms of staking.
Binance also treats Ethereum staking somewhat similarly to Lido, with the BETH token that ETH stakers can get. This token can be traded back to ETH, making it a liquid form of staking that’s usable in selected other activities.
#4. Kraken
Kraken is another top-tier cryptocurrency exchange and enjoys significant popularity and an excellent reputation, even advising customers that crypto best practices include withdrawing coins off-exchange.
It also doesn’t have its own token, unlike most of its major competitors. Kraken’s reputation suggests that it is one of the best platforms to stake your crypto, and the absence of its own token ensures that it isn't following the FTX model of operation.
Regulators are increasingly scrutinizing exchange staking, and Kraken settled with the U.S. SEC to the tune of $30 million in February 2023. In a complaint lodged days prior, the SEC alleged that exchange staking reflects an unregistered offer and sale of securities.
On top of the settlement payment, Kraken announced that it would automatically unstake all U.S. client assets and cease to offer staking services to U.S. customers. Though, if you’re from outside the U.S., you can still stake with Kraken.
#5. Coinbase
Coinbase is often considered one of the leading cryptocurrency exchanges, and the number one exchange in the U.S. It is also the only crypto exchange to be publicly traded following its IPO on the Nasdaq exchange.
The exchange retains significant popularity across the world as well as in the U.S., and has a spotless track record when it comes to security. It also doesn’t have its own cryptocurrency token.
If you’re interested in using Coinbase, check out whether it’s Coinbase or Coinbase Pro that suits you better. The latter often has a far friendlier fee schedule for buying coins and tokens.
#6. Crypto.com
Famous for its fantastic domain name, Crypto.com is a cryptocurrency exchange that notably doesn’t refer to its yield-bearing products as staking. Crypto.com’s Earn product allows you to earn interest on over 21 cryptocurrencies and stablecoins.
Users who choose to buy and lock up Crypto.com’s own CRO token can earn even greater interest rewards for using Crypto.com Earn. It’s also a mobile-based application, and all app users except those in Switzerland, Hong Kong SAR, Russia, and Malta can make use of Crypto.com Earn.
Crypto.com customers who lock up CRO tokens can also access the platform’s range of debit cards for crypto cashbacks. Several of the best crypto staking platforms offer this service, but Crypto.com was one of the trailblazers in this regard.
#7. DeFi Staking
Decentralized Finance took the world by storm in 2020 and showed the world how the advanced financial strategies used by professional traders could change lives when not subjected to gatekeeping.
Armed with a wallet with a few assets and coins for gas, you can use DeFi to take part in liquidity mining, yield farming, and become a liquidity provider to earn a passive income. The down-sides of DeFi are that the strategies can take a while to understand, and navigating the ecosystem can be quite intimidating.
The advantage of DeFi is that everything is under your control, and most DeFi staking platforms are decentralized. You can even scan the smart contract code before you take part so that you know what’s going on with your funds—it’s all completely transparent.
Some of the best DeFi staking platforms include:
Key Takeaways
Staking is a term that’s often bandied about but is often misconstrued. It’s a crucial component of the blockchain industry’s technology and serves as the basis for attaining security and consensus in networks such as Ethereum.
However, many platforms market themselves as offering staking to clients. Many of these simply pay yield in exchange for custodying assets, and U.S. regulators such as the SEC are no longer turning a blind eye toward this practice. Whether custodians can continue to call interest-bearing deposits “staking,” for much longer is something only time and legal fees will tell.
Staking can also be looked at as the practice of depositing crypto coins or tokens into an on-chain smart contract. For example, DeFi staking has a legitimate claim to the word but doesn’t secure the network. Instead, it secures liquidity, and if you’ve done your homework, DeFi and liquidity pool staking can definitely be a viable source of passive income.
Though, if you want to stake your crypto, there’s no better way than to stake or delegate directly to the blockchain. You’ll be playing an active role in ensuring network security, thereby helping to protect your own assets, and that’s where you’ll get the highest verifiable and transparently obtainable APY.
Best Crypto Staking Platform FAQ
Which wallet is the best for staking?
The best wallet for staking is the one most applicable to the blockchain you’d like to stake on. But, hot wallets like Metamask are a great choice for most users because they can be configured for a lot of blockchains and can stake tokens or perform any blockchain transaction with just a couple of clicks.
On the other hand, if you’re staking with a centralized platform, you don’t really need a wallet.
Can you get rich from staking?
It’s definitely possible to get rich from staking, given the volatility of cryptocurrency and the massive appreciation of many coins across the last few years. Staking provides a passive income and gives you a leg up on people who elect not to stake their coins.
However, as Celsius, BlockFi, and FTX users have found, you can also lose a lot, if not all, of your money in a flash by using the wrong centralized staking platform, whether due to poor risk management or worse. On-chain staking could be considered safer in this regard, but blockchains can still be attacked or fail, and coins can go to zero.
What cryptocurrency can I stake?
You can stake most coins or tokens with a staking function built into the protocol. Some cryptos may be easier or harder to stake than others and may even have steep minimums. Centralized platforms are a bit different because they take your deposits and pay you a yield. This yield may be generated by staking, but it could also be acquired via other activities such as rehypothecation.
How does staking work?
Crypto staking means locking your coins into a smart contract on a PoS blockchain and earning a share of the coin’s inflation via block rewards. On some blockchains, this may entail having to run a validator node, but on others, you can simply delegate your stake to a validator.
The term “staking” is also used for depositing coins to a centralized custodian and being paid out a yield, although this terminology may change in the future as regulators begin to scrutinize the practice.