After the DeFi market soared to over $200 billion USD in 2021, staking became an attractive method for generating passive income and preserving ROIs. Some platforms platform may offer as much as 5-30% or even 100% interest on specific assets, compared to a bank’s savings account, where one earns around 2% or 3% interest. Non-Custodial Offline Staking is becoming increasingly popular with crypto holders as they can keep full control of their private keys and staked funds – this is important to consider when deciding which staking platform to use.
Amid all the news headlines about NFTs and DeFi, there’s one area of crypto that’s been in incredible growth this year – yet it rarely seems to attract comment. In the last year or two, funds have been positively pouring into the staking sector. The fact that proof-of-stake has now become the de facto consensus method of choice for newer blockchains has undoubtedly been the core reason for the increase.
However, along with an increase in platforms, there has been significant funds pouring into staking infrastructure and innovating on the staking model by providing liquidity to staked tokens.
It’s hardly surprising when you consider that even the lower rates of return clock in at around 5% – significantly more than you’d get from a bank. As a result, there’s now a burgeoning staking market that now accounts for over $365 billion in funds locked across all proof-of-stake chains.
But with so many projects on the scene, it can be difficult to know where to start. Here are three great platforms to check out if you’re looking to cash in on the growing trend for staking.
For many people, staking can be a daunting task as it usually means either staking funds using an online software wallet like Metamask or placing trust in a third party such as an exchange or staking pool. Both come with inherent risks. Once you hand over your cryptocurrency to a third party, you’re dependent on them to safeguard it against hacks and attacks. However, online wallets are also vulnerable to malicious incidents.
Most hardened cryptocurrency users advise getting your own hardware wallet, but doing so will mean you’re excluded from staking on most networks.
However, Qtum QTUM, 12.03% is the exception to that general rule, offering an offline staking option via users’ own wallets, including cold wallets. Any non-staking wallet capable of making the delegation assignment transaction can delegate QTUM tokens to one of the network’s “Super Stakers,” which are effectively nodes capable of accepting delegated addresses. Offline staking is non-custodial, so users keep full control over their staked funds and private keys. Furthermore, there is no unstaking period – a mandatory notice period to unstake tokens required on many blockchains.
QTUM currently pays out returns of over 20%, which is very competitive compared to rival blockchains. Furthermore, with the first QTUM halving due to take place imminently, the rewards could become subject to an inflationary squeeze similar to what happens when Bitcoin rewards undergo their regular halving.
Polkadot DOT, 7.60% has been whipping up a storm over recent weeks with the launch of its long-awaited parachain auctions in mid-November. The network already launched its main proof-of-stake chain last year, which has been in stable operation and paying out staking rewards of around 12-15% ever since.
However, the parachain auctions introduce an intriguing new dynamic to Polkadot’s DOT tokenomics. They allow users to stake their DOTs in a loan to projects wanting to operate as a parachain on the Polkadot main chain. In return, DOT lenders can earn generous token rewards from the projects. Timing is another factor, though – loaned funds cannot be unlocked for 96 weeks, whereas stakers can have access to their liquidity within only 28 days.
This dynamic creates a system of gamification among DOT holding community, who have multiple forces competing for their DOTs to stake. Projects must offer a compelling enough reason to entice users to lend DOTs, but once too many DOTs become unstaked, the algorithm will increase the staking incentives to lure back DOT holders.
As such, there are plenty of reasons for those interested in staking to take a look at the opportunities on Polkadot. The timing is also ideal – the parachain auctions are already underway, and although some of the projects have already closed their loans, others are still open for participation.
Cardano ADA, 6.38% has been one of the biggest staking networks since launching its proof-of-stake consensus on mainnet in the summer of 2020. It only recently lost its crown to Solana as the network with the most tokens staked, boasting over 70% of the total ADA supply locked in the network. One good reason to stake with Cardano is that it has a high level of interest from institutional market participants due to its long-term roadmap and peer-reviewed codebase.
Although it doesn’t offer an offline staking option like QTUM, Cardano holders can still enjoy non-custodial staking with a wallet like Exodus. The network has several important upgrade announcements due imminently. However, perhaps most importantly, it’s gaining significant traction among the developer community, who have been waiting several years for the network to launch smart contract capabilities.
Given we’ve seen considerable price action in other platform tokens following the big adoption announcement, ADA is definitely one of the staking tokens worth watching over the coming months.
It’s not just events in the crypto markets that are drawing the spotlight towards staking. The threat of interest rate rises and an all-round shaky economy post-Covid means that investors are interested in new and innovative ways of generating returns. All things considered, the future looks bright for staking.
Via this site