For long-term investors, staking has become an essential strategy to generate passive income while holding digital assets. By locking tokens into a network or protocol, users can earn attractive yields, reduce the impact of market volatility, and contribute to blockchain security. This article highlights six cryptocurrencies that offer compelling staking rewards in 2024.
What Is Crypto Staking?
Staking involves locking cryptocurrencies in a wallet, smart contract, or protocol for a specific period. In return, stakers receive rewards, typically in the form of additional tokens. This process is fundamental to blockchains that use Proof-of-Stake (PoS) or its variants, such as Delegated Proof-of-Stake (DPoS) or Nominated Proof-of-Stake (NPoS).
Unlike traditional savings accounts, staking does not involve lending funds. Instead, staked tokens act as collateral to help validate transactions and secure the network. Rewards are distributed to those who participate in block validation or delegate their holdings to validators.
Staking is generally more accessible than mining, as it doesn’t require expensive hardware. Many platforms allow users to stake directly from their wallets or through user-friendly interfaces.
Top Cryptocurrencies to Stake for Passive Income
Here are six digital assets that offer attractive staking returns, unique features, and established use cases.
1. The Graph (GRT)
Average APY: Up to 198.79% (for delegators)
The Graph is a decentralized protocol for indexing and querying blockchain data. It allows developers to build and publish open APIs (called subgraphs) that applications can use to access blockchain information without relying on centralized servers.
GRT, the native token, is used to coordinate network participants. Indexers stake GRT to provide indexing and querying services, while delegators stake to support indexers without running infrastructure themselves. Delegators can earn high annual percentage yields (APY) with relatively low technical overhead.
2. Axie Infinity (AXS)
Average APY: 74.1%
Axie Infinity is a leading play-to-earn game where players collect, breed, and battle fantasy creatures called Axies. The platform operates on the Ronin sidechain, which is designed for fast and low-cost transactions.
AXS is the governance token of the Axie ecosystem. Holders can stake AXS to earn rewards and participate in key decisions. Staking is straightforward: users transfer AXS to a Ronin wallet and use the official dashboard to stake tokens.
3. PancakeSwap (CAKE)
Average APY: 48.26%
PancakeSwap is a decentralized exchange (DEX) on the Binance Smart Chain (BSC). It offers token swaps, yield farming, lottery, NFT collectibles, and other DeFi services.
CAKE is the platform’s utility token. Users can stake CAKE in Syrup Pools to earn additional tokens or a share of transaction fees. PancakeSwap is known for its high yields and user-friendly interface, making it a popular choice for DeFi enthusiasts.
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4. TerraUSD (UST)
Average APY: 19.31% (via lending)
TerraUSD (UST) is an algorithmic stablecoin pegged to the US dollar. It is part of the Terra ecosystem, which aims to create a decentralized financial infrastructure.
While you can’t stake UST directly, you can lend it on DeFi platforms like Anchor Protocol to earn interest. This approach offers a lower-risk alternative to volatile assets, as UST is designed to maintain a stable value.
5. Polkadot (DOT)
Average APY: 14.02%–14.73%
Polkadot is a multi-chain network that enables interoperability between different blockchains. Its relay chain connects various parachains, allowing them to communicate and share security.
DOT is used for governance, staking, and bonding. Users can stake DOT by nominating validators or running their own validator nodes. Staking rewards are moderate but reliable, and the network’s strong fundamentals make DOT a solid long-term holding.
6. AAX Token (AAB)
Average APY: 3%–8%
AAX is a global cryptocurrency exchange that offers a native utility token, AAB. The token provides benefits such as trading fee discounts, access to exclusive products, and staking rewards.
Users can stake AAB in flexible or fixed-term savings products to earn APY. The exchange uses a portion of its futures trading revenue to buy back and burn AAB, reducing supply and potentially increasing its value over time.
Frequently Asked Questions
What is the minimum amount required to start staking?
The minimum stake amount varies by platform. Some protocols, like Polkadot, require a significant number of tokens to run a validator node. However, many services allow delegation with small amounts. Always check the specific requirements of each network.
Is staking safer than trading?
Staking is generally considered less risky than active trading because it doesn’t involve short-term speculation. However, it carries its own risks, such as smart contract vulnerabilities, validator slashing, or token depreciation. Diversify your stakes and choose reputable platforms.
Can I unstake my tokens at any time?
Some platforms offer flexible unstaking, while others require a lock-up period. For example, Polkadot has a 28-day unbonding period. Always review the terms before staking to ensure you understand the commitment.
How are staking rewards taxed?
In many jurisdictions, staking rewards are considered taxable income. You may need to report them at fair market value when received. Consult a tax professional to understand your local regulations.
What is the difference between staking and yield farming?
Staking typically involves locking tokens to support network security and earn rewards. Yield farming usually provides returns by supplying liquidity to DeFi protocols. Both can generate passive income, but yield farming often involves higher risks and complexity.
Can I stake stablecoins?
Most stablecoins aren’t staked directly. Instead, they are lent through money markets or provided as liquidity in pools. Platforms like Anchor Protocol offer attractive yields on stablecoin deposits.
Staking offers a practical way to earn passive income in the cryptocurrency market. By carefully selecting assets and platforms, you can maximize returns while supporting blockchain networks. Always conduct thorough research and consider risk tolerance before staking your tokens.