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Published: Dec 2, 2022, 11:45am
Investors love generating passive income, but plenty of market experts claim that cryptocurrency lacks the ability to provide a source of income. That’s not entirely true. Staking (as well as a few rewards programs) can generate interest income from the crypto that you own right now.
You can earn rewards through staking by locking up your crypto to help run the blockchains that support certain cryptocurrencies. If you’re interested in staking or a crypto rewards program, picking the right crypto exchange is essential. This will ensure that you get access to the right resources and the highest yields.
To help you choose the right crypto exchange for staking and rewards, Forbes Advisor has surveyed the best crypto platforms for staking.
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More than a dozen cryptocurrencies are available for staking on Kraken, with yields ranging from 4% to 23%, depending on the crypto. Lesser-known coins tend to offer higher yields. The yields on Cardano (ADA) and Ethereum 2.0 typically range between 4% and 6%. One additional perk: There’s no minimum time for locking up your crypto to earn rewards.
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Gemini supports more than 40 cryptocurrencies for earning rewards via its Gemini Earn program. While it’s not a staking program per se, Gemini Earn is a lending platform that lets users lend out their crypto holdings in exchange for interest payments.
Like staking on other crypto exchange platforms, users earn an annual percentage yield for participating with their crypto holdings. For example, at the time of this writing, you can earn 4.55% APY on your Solana holdings.
For those who want a more traditional staking program, Gemini offers staking for the following tokens: Polygon (MATIC) and Ethereum (ETH).
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Users can participate and earn a myriad of types of rewards with their cryptocurrency on KuCoin. The interest-bearing rewards range from being accrued from promotions, savings or stakings, which are all a part of KuCoin Earn. The fixed interest available on Ethereum 2.0 is nearly 4.7% annually.
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Coinbase only offers a limited number of coins for staking and rewards. But the most popular cryptos for staking are available on the platform. Depending on the selected crypto, a minimum balance may be needed for staking.
We performed an in-depth assessment of the features and options offered by nearly 25 cryptocurrency exchanges, crypto trading apps and brokerage platforms that offer crypto trading options. To identify the best exchanges for staking, we looked at the following key variables to assess each platform:
These variables helped us benchmark the staking and crypto interest features, among others, of the crypto exchanges and brokerages we surveyed. The sum of weighted values across all or some of these key factors was calculated for each ranking to award each brokerage or exchange its overall rank.
Staking is a unique feature allowed with some cryptocurrencies. When users stake their cryptocurrency, they lock a set amount of their crypto funds for a certain period to help maintain operations on a particular proof-of-stake blockchain system.
A proof-of-stake mechanism is a method for some cryptos to verify transactions and consensus on their blockchain networks. With this method, users are given an incentive of rewards when they stake their coins.
According to Staking Rewards, more than £107 billion are locked up in supporting proof of stake. The cryptocurrencies with the highest staking market cap include ETH, SOL and ADA, in which the typical annual yield is around 4% to 5%.
While there are many cryptos available that are yield-bearing, the most common cryptocurrencies that traders stake for passive income are:
• Algorand
• Ethereum 2.0
• Chainlink (LINK)
• Polkadot (DOT)
• Cardano
Note rewards on the Ethereum network are typically locked up until the Ethereum 2.0 network is complete. Also of note, more than 10% of Ethereum is staked. Depending on the platform, traders can also stake stablecoins like USD Coin, Dai (DAI) and Tether.
There are a vast number of cryptocurrencies and crypto exchanges that allow staking, and even some crypto wallets support crypto staking, too.
While we ranked Gemini, KuCoin, Kraken and Coinbase as the Best Crypto Exchanges for Staking and Rewards, other crypto exchanges offer staking and rewards for crypto holdings. Bitstamp and eToro are a few examples.
Staking requires a lock-up period during which users can’t transfer or use their tokens. Users need to research the crypto they’re staking since they will not be able to conduct transactions with their token(s) for some time.
Cryptocurrency exchanges typically require a minimum lock-up period when you stake your crypto. And if a particular crypto is volatile, your tokens might be locked up (for staking), leaving you unable to sell.
My work has appeared in TheStreet, Mansion Global, CNN, CNN Money, DNAInfo, Yahoo Finance, MSN Money, and the New York Daily News. I’m an alumna of the London School of Economics and hold a master’s degree in journalism from the University of Texas at Austin. Follow or DM me on Twitter at @farranpowell.