In the cryptocurrency markets, there are different ways to earn passive income which include staking your cryptocurrencies.
Trading and mining stand out as basic ways to earn cryptocurrencies. However, there are other basic ways to earn the same. For instance, you can earn crypto passive income just by owning and storing your coins (popularly referred to as HODLING). Another way is accepting it as a mode of payment.
Proof of Stake is a blockchain consensus algorithm based on the concept that crypto investors store up digital assets as collateral in order to help secure blockchain networks by periodically validating transactions. For their contributions to the network, stakers are periodically paid in newly created crypto assets and/or transaction fees.
There are two major ways blockchain reward users for participating in their networks. PoW (Proof of Work) awarded miners for validating transactions anytime a new bitcoin is mined. A few years later, the PoS (Proof of Stake) concept was launched and first pioneered by Peercoin.
Proof of Stake (PoS) is largely viewed as the greener, and a more scalable version of Proof of work (PoW) consensus in Bitcoin.
To earn passive income with cryptocurrency staking, a clear understanding of the rewarding mechanism is necessary. This requires minimal setup and technical know how as opposed to mining.
Now, we’ll take a quick look at some of the best proof of stake coins in 2020 in no particular order. You should have a good idea of the concept behind these coins and their stake specifications after reading this article.
1. NEO (NEO)
Neo is a cryptocurrency also known as “Chinese Ethereum” that supports smart contracts, ICOs and DAPPS. A Chinese company established Antshares which was later rebranded as NEO. The project has claimed to be China’s first public blockchain.
In addition to NEO, there is another coin/token known as GAS that can also be stored in the same wallet as NEO and generate passive revenue. While NEO serves as the proof of stake token and allows people to participate in votes concerning improvements to the blockchain, GAS is used to pay fees for the transactions that are being completed on the network.
You earn NEO staking rewards in GAS, which is what NEO users pay to execute NEO smart contracts. You can visit their official website to get started.
Staking Rewards currently lists NEO earning rewards at about 1% annually.
2. Tezos (XTZ)
Tezos operates a blockchain platform similar to Ethereum. Widely popular for having one of the biggest ICOs of all time, this digital asset differentiates itself by focusing on fixing governance issues (things like network upgrade protocols) that plague the likes of Bitcoin and Ethereum.
Tezos allows stakeholders to vote for network changes and its blockchain records these votes for all to see. The Tezos network then proceeds to implement these changes after receiving enough votes from stakeholders.
Participants receive block rewards on XTZ coins for participating in the validation of the Tezos blockchain.
Tezos is currently the 18th most valuable crypto asset by market value and the staking rewards is currently about 5.54% per year. Tezos has managed to stay in the top 20 list since the start of 2020.
3. Decred (DCR)
Decred was launched in 2016 as a Bitcoin fork focused on on-chain governance and consensus mechanisms. Other features of the project include cross chain atomic swaps, smart contracts, cross platform wallets, and a public proposal platform.
Decred holders can use their DCR to obtain voting tickets which can be used to approve the block generation by miners and to vote on any open network proposals.
We consider Decred a long-term stable project with a large user base and good staking rewards (currently about 6.78%). Its on-chain governance is arguably one of the best decentralized solutions created so far.
4. Synthetix (SNX)
Synthetix is a cryptocurrency project developed on the Ethereum blockchain. The creation of these digital tokens are linked to the value of other assets like physical commodities, stocks, bonds, fiat currencies and other cryptocurrencies.
This digital asset is ERC-20 compliant and backed by the SNX token which tracks the price of an external asset. Synthetix also runs an exchange, where your tokens can be easily traded in a peer-to-peer fashion and with infinite liquidity, so traders have no worries over slippage or an order book.
Unlike most other blockchain projects it includes two different types of tokens:
The main token which is used in the creation of synthetic assets called Synthetix.
The second token type is called the Synth. These are all the synthetic assets that are created using the Synthetix platform.
In order to issue a new Synth the Synthetix system requires collateralization of 750%. This means to mint 100 synthetic USD (sUSD) a user needs to lock up the equivalent of $750 in SNX tokens.
This large collateralization requirement creates a large buffer for the Synths in circulation and protects against sudden market moves.
Users first purchase SNX tokens and then lock them in a compatible wallet. Once they’ve locked up the SNX tokens they can be used to create Synths to track the price of some other real-world asset.
Staking rewards were added to the Synthetix network in March 2019 as a way to fulfill the need for people to contribute to the system.
The rewards come from transaction fees and must be claimed by users through the Mintr DApp, which is also used to mint Synths. Staking rewards can be claimed for up to two weeks in arrears, but if not claimed by then the reward is returned to the reward pool. The current annual return for staking SNX is about 37.42%.
With the huge annual reward this is obviously a good way to generate passive income.
5. Cosmos (ATOM)
The primary objective of Cosmos is to become the internet of blockchains by linking all the multiple blockchains on a single network where tokens can be transferred seamlessly throughout the network.
Over 100 different companies including Binance are using Cosmos to build their own projects.
Cosmos uses a delegated proof of stake system in which there are validators who work to validate transactions and add new blocks to the blockchain.
Cosmos offers an excellent staking reward system with a current annual return of 8.11% paid in ATOM tokens.
Staking is as easy as holding the ATOM tokens and choosing a validator to delegate to through supported wallets. It is recommended to periodically claim these staking rewards manually.
6. TRON (TRX)
Tron is an ambitious project committed to the development and maintenance of a fully decentralized Internet. Tron has demonstrated this through its partnership with Poloniex (a cryptocurrency exchange), purchase of BitTorrent and Steemit (the biggest blockchain social platform) and also the growth of other decentralized applications.
The current annual interest rate for staking TRX tokens is approximately 4.33%. You can follow this guide on how to stake Tron to get started.
7. ICON (ICX)
Icon is an established blockchain with a solid core user base. Any number of ICX can be staked, but it has to be held in the official Icon wallet, which is available on iOS and Android, or as a Chrome extension.
Every ICON holder can stake his ICX tokens with a single click inside the wallet.
Stakers receive 3 votes for each token. In addition to staking, holders must vote for P-Reps, which is Icon’s version of validators. They can also be used to vote for dApps and Ecosystem Expansion Programs. For each vote, they receive 2 – 12% annual rewards. For all 3 votes this will result in a total reward between 6 – 36% on an annual basis.
8. DASH (DASH)
Dash can be referred to as private and digital cash. It’s a cryptocurrency that focuses on swift, secured and private transactions. Its push for widespread adoption has definitely paid off since you can now spend Dash at thousands of locations.
Dash also popularized masternodes, which are like the miners who confirm transactions on networks like Bitcoin. But mining can require lots of technical knowledge in order to operate mining equipment. For Dash masternodes, you only need to hold some Dash as collateral.
If you run a Dash masternode, you provide Dash services like instant transactions, private transactions, and governance. For your contributions, the network pays you in Dash currently about 5.6% a year.
Staking is one of the innovative and forward thinking ways available to cryptocurrency investors to earn passive income in the blockchain ecosystem.
If you are new to cryptocurrency and want to get started, here is a list of top cryptocurrency exchanges you can make use of and some of the best cryptocurrency wallets you can store your digital assets in.
Although some of the cryptocurrencies mentioned above would require you to download their official wallets to stake, Exodus wallet allows you to exchange most of the coins right from your wallet seamlessly.
Cryptominer Solutions provides secure access to the digital currency asset class for accredited investors through our diversified blockchain investment product portfolio. And with inflation on the rise globally, it would only be financially smart and recommended to focus and invest in a more stable, secure and decentralized digital assets. You can reach out to our support team for more information and guide on how to get started.
Resources: Exodus, Coin Bureau, Staking Rewards