Staking cryptos is the process of committing your crypto assets to support a blockchain network and confirm transactions. It is compatible with cryptos that use the Proof-of-Stake (PoS) model to process payments. This is a lower-energy and better variant of the original Proof-of-Work (PoW) consensus.

Proof-of-Stake is a consensus mechanism that allows users to stake their cryptos. Then, at random intervals, one of them is chosen to have the authority to authenticate the next block. The probability of being chosen increases with the number of coins staked. You have a better chance if you have more coins locked up.

Staking your crypto can be a great way to generate passive income, especially since some cryptos offer high-interest rates for staking. In staking, the token holders deposit – or lock away – a number of tokens in order to become active participants in the network’s operation. This way, they become “validators” (also known as “stakers”), whose role is to propose and verify new data that is added to the system. Let’s have a look at the top 5 staking coins to earn rewards in 2023.

1. Cardano

Cryptos such as Bitcoin use a Proof-of-Work, or PoW, model to verify transactions. Cardano employs a popular alternative form of verification known as Proof-of-Stake or PoS. Investors increase the chances of producing blocks by delegating Cardano’s native crypto ADA to a stake pool. When blocks are created, the pools earn rewards, which are then distributed to all pool contributors. Users have complete control over which pool they wish to join. They can also evaluate each one based on their previous performance, uptime, and pool size. Depending on how you stake Cardano, you can earn anywhere from over 1.9% to over 7%, with 1.9% requiring very little investment.

2. Solana

Solana was one of the biggest crypto surprises of 2021. Using a Proof-of-Stake consensus, Solana secures the network through economic validators rather than miners. As a result, this staking mechanism allows you to earn rewards without the need for any hardware or money. To begin, SOL tokens in your wallet must be transferred to a stake account. You can open as many stake accounts as you want and deposit as much or as little SOL as you want into each one. Each new stake account has its own address, and a single wallet can manage or “authorize” multiple stake accounts.

As more token holders choose to stake their SOL tokens across the network and the total amount of stake on the network grows, it becomes increasingly difficult for even a well-coordinated and well-funded attacker to single-handedly change the outcome of a consensus vote for their own benefit.

You can stake your tokens by delegating them to validators, who process transactions and run the network. It is a shared-risk, shared-reward financial model that may provide long-term returns to token holders. Returns/yield for staked tokens are determined by the current inflation rate, the total number of SOL staked on the network and the uptime and commission of an individual validator.

3. Ethereum

Staking Ethereum means depositing 32 ETH in order to activate validator software. Broadly speaking, during each round of validation, the PoS-powered blockchain bundles 32 blocks of transactions. This process takes an average of 6.4 minutes. These block bundles are referred to as “epochs.” You will be in charge of storing data, processing transactions, and adding new blocks to the blockchain as a validator. This will keep Ethereum secure for everyone while also earning you new ETH. Beacon chain has introduced the PoS (Proof-of-Stake) protocol for Ethereum.

When the validation round occurs, the Beacon Chain selects 128 validators at random and forms a committee. For data processing, each committee is assigned a unique shard. Each epoch has 32 slots, each of which requires one committee to process the data, i.e., 32 committees create each epoch. Actions that aid the network in reaching consensus are rewarded. You’ll be rewarded for batching transactions into a new block or double-checking the work of other validators because this is what keeps the chain secure.

4. Binance

Binance has one of the highest trade volumes in the crypto market. BNB is the native cryptocurrency of Binance. To stake Binance Coin (BNB), you must have at least 1 BNB, and all of your coins must be on the Binance Chain. Every day, the BNB holders can help choose the validator(s) on the network and be rewarded for helping secure the network to make the network more decentralized. Delegating BNB to a validator or multiple validators on the Binance Chain is the process of staking BNB.

Validators on the Binance Chain are compensated by their delegators. The commission percentage is calculated by summing all delegated BNB minus the BNB that is self-staked by the validator and then multiplying by the commission percentage. Validators receive 100% of their self-staked rewards.

5. Cosmos

Cosmos (ATOM) is a crypto that powers an ecosystem of blockchains that are designed to scale and communicate with one another. The team’s goal is to “create an Internet of Blockchains, a network of decentralized blockchains capable of communicating with one another.” Cosmos uses Proof-of-Stake consensus.

Staking your ATOM is an excellent way to generate passive income through staking rewards. ATOM is used to payout rewards. You can think of it as earning interest in your cryptocurrency holdings. Staking in Cosmos means agreeing to lock up a certain amount of your ATOM for a set period of time during which it is unspendable. You can, however, unlock your ATOM whenever you want.

You actively support the Cosmos network by allocating resources to it by staking your ATOM. Staking also contributes to the network’s stability. As a reward for your assistance, you will receive more ATOM. The Cosmos validators are responsible for validating and approving transactions on the Cosmos blockchain. The more ATOM they are delegated, the more transactions they can validate and the more powerful they become. You basically “vote” for them and show your trust in them by delegating your tokens to them.

The greater the number of transactions validated by a validator, the more money they earn. They return the earned rewards to those who delegated their ATOM to them. This is how you make your money. You can stake any amount of ATOM and begin earning rewards right away. During this time, you will be able to conduct transactions only with the unspent amount of ATOM in your wallet.

Many long-term crypto investors see staking as a way to put their assets to work for them by generating rewards rather than just sitting in their crypto wallets collecting dust. Staking also helps to secure and optimize the blockchain projects you support. Staking some of your funds increases the blockchain’s resistance to attacks and its ability to process transactions. Some projects also give staking participants “governance tokens,” which give holders a right to present their stand in future protocol changes and upgrades.
You can calculate your staking rewards for the cryptos listed above and many more here. However, choosing a reliable platform to stake your coins is essential. WazirX is India’s leading crypto exchange platform that allows you to buy, sell and trade cryptos at low fees. Start your trading journey with WazirX.