If you are dealing with crypto investments and want to earn income from cryptocurrencies, staking has become a concept you hear often. Staking, which is the way many cryptocurrencies validate transactions, helps investors earn cryptocurrency or rewards on the assets they hold. But what does proof-of-stake (PoS) mean?

Crypto staking helps you stake your cryptocurrencies and in the process, you use your crypto assets to support a blockchain network. You also pledge your crypto assets to help confirm transactions during this process. There are also cryptocurrencies with a proof-of-stake (PoS) model that you can use to process your payments.

KEY TAKEAWAYS

  • Staking can be a pretty good way to generate passive income, as the networks offer an advantageous rate of rewards to the owners of selected validators.
  • Platforms that use the proof-of-stake method as a consensus mechanism use the asset you stake as a validation method within the network 
  • Proof-of-stake, a consensus mechanism used to reduce fees and increase speed and efficiency in the process of adding new blocks to the networks, is used as a passive income generating way. 
  • Proof-of-stake is an underlying consensus mechanism that enables staking, a passive income-generating method, to work. 

What is Crypto Staking?

Crypto staking, which is based on people and investors locking their crypto money into a staking pool for certain periods on a daily, weekly, or monthly basis, allows investors to earn rewards in this way. Generally, in the crypto staking method, you can earn money independently without being affected by the changes in the values ​​of the cryptocurrency in the market. But the most important point here is that if the value of the crypto asset you use to stake decreases, the interest gaining you will have will also decrease.

How Does Crypto Staking Work?

If your crypto asset is a cryptocurrency that allows crypto staking (for example, Tezos, Cosmos, or Ethereum), you can earn a compound interest reward on your assets by locking your assets into a staking pool. Let’s not forget that staking pools are generally similar to interest-bearing deposit accounts.

When you include the crypto money you have in any staking pool, the most important reason for you to earn money or rewards on your crypto assets is that the blockchain network operates this money inside. Platforms that use the proof-of-stake method as a consensus mechanism use the asset you stake as a validation method within the network. In other words, for each block to be added to the network, a random selection is made among the assets of the staking users to be used as a validator. If your asset is used for the validation process, you get a gaining here.

What Does Proof-of-Stake Mean?

Proof-of-stake, a consensus mechanism used to reduce fees and increase speed and efficiency in transactions in a particular blockchain network, is one of the most common ways to ensure the security of a network, as well as enable the creation of a new block on a chain. The most important reason why the proof-of-stake (PoS) method reduces costs is that now, there is no need for crypto miners’ huge computers that solves complex mathematical problems to add a new block to the chain, which means intense energy that was necessary for hardware devices are not consumed anymore. Thanks to proof-of-staking, all transactions are verified with the help of people who invest through staking instead of miners.

To learn one more consensus mechanism, go to the ”Proof of Burn (PoB)” article!

Are Proof of Stake and Crypto Staking the Same Thing?

Crypto Staking and Proof of Stake are not the same thing but are highly interconnected. Primarily, both are a method of securing a blockchain network and adding new blocks to the chain. Of course, there are important differences in the operating systems.

  • In the proof-of-stake, which of the users who stake their assets will be the validator is chosen randomly. So users who stake more assets have more chances to become validators and earn rewards. In proof-of-work, the node that solves the complex mathematical problem in the fastest way adds the new block to the network and works as a validator. In this way, he gets the award. In this case, it would not be wrong to say that while the possibilities are fighting in the first option, the hardware power is competing in the second option.
  • Due to the structure mentioned above, proof-of-work runs slower compared to proof-of-stake. This means that it takes longer to add a block to the chain. For a user of the network, this will mean longer execution of an ordered transaction.
  • Proof-of-work requires long-term use of large-scale high-performance hardware devices. As might be expected, this is not very environmentally friendly. Proof-of-stake only requires users to lock their assets. Validation will be achieved with this method, without the need for any energy use.

The Best Cryptocurrencies to Stake & Earn in 2022!

Let’s have a look at the best cryptocurrencies that you can stake and earn high amounts of rewards in 2022:

  1. Lucky Block (LBLOCK): Launched in 2022, this token has made rapid progress and has grown by 6,000% in a very short time, bringing great revenues to the stakers.
  2. Ether (ETH): Those who want to do long-term staking often start researching Ethereum first. However, if the staking requirement is at least 32 ETH, it can cause many people to withdraw. Still, ETH is a reliable option with its promising market prices and long-term winning graphics.
  3. Cardano (ADA): Cardano, which attracts the attention of many investors with its 4.500% growth in its market value, is a promising crypto project with its sustainability.
  4. Uniswap (UNI): Meet the native token of Uniswap, one of the most used DAOs on the Ethereum network: UNI. Uniswap alone operates 25 percent of the entire ETH DAO market. With the Uniswap V3 update, transaction fees in the ecosystem have decreased even more, and staking revenues are really promising.
  5. Solana (SOL): Seeing what Solana has accomplished in 2021 really gives hope for 2022. Because SOL went up from $18 to over $100. If you also want to make money from long-term staking rather than short-term trading, SOL can be a good choice.
  6. Polkadot (DOT): The biggest difference of Polkadot from other staking coins is that it determines the reward proportions according to the work done, not the amount staked.
  7. Polygon (MATIC): Polygon has become the most popular cryptocurrency of recent times due to two main facts. First, the APY rates offered on the platform are really high. Secondly, the token really pleased its investors with a 350% increase.
  8. Algorand (ALGO): You only need one ALGO to start staking in Algorand. So even for beginners, ALGO is a good option.
  9. Chainlink (CHAIN): It would be a very wrong choice to only look at the APY rates when investing in a token. The right thing to do is to take a look at the team and collaborations of the project, to see if the project is promising or not. Aiming to create next-generation integrations between real-world and smart contracts, CHAINLINK has collaborations with Compound, Celsius, Nexus Mutual, Aave, Synthetix.
  10. The Graph (GRT): Supporting API development processes in the blockchain network, The Graph enables DeFi, governance, exchange, marketplace generation. The Graph FrameWork has collaborations with DTC Capital, CoinFund, StakeFish, Compound.

Why do you get cryptocurrency as a reward with the cryptocurrencies or tokens you stake?

Because your staked assets are used to validate new transactions within the network and to ensure network security. In return, the network offers you rewards at various rates. 

What do you need to do to stake your cryptocurrencies?

If you want to stake your cryptocurrencies on a blockchain network, you first need to find out which cryptocurrencies are suitable for crypto staking. Note that not all cryptocurrencies use proof-of-stake as a consensus mechanism.
After learning which cryptocurrencies you can use for crypto staking, find a reliable crypto staking platform and learn how much you need to deposit your cryptocurrencies and an advantageous rate of reward. Deciding on the duration you are going to stake your asset can be crucial for your income level. If you meet all the requirements and you have a crypto wallet, you can start your adventure.

Which cryptocurrencies are more suitable for crypto staking?

Although many cryptocurrencies in the market have been made suitable for crypto staking, they promise different rates of rewards & advantages. The annual return of the cryptocurrencies you use for staking will be between five and twenty percent. Taking advantage of cryptocurrencies, which will have both high returns and low depreciation, is essential to generate more income. You can use cryptocurrencies like Solana, Polkador, Ether, and Cardano for this.