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Staking cryptocurrencies has largely become a primary form of earning passive income in the crypto space.
In recent months, there has been a noticeable growth in the number of staking services providers, with a growing number of crypto-exchanges and platforms adding support for proof-of-stake (PoS) tokens opening a gateway for staking.
Following the growth in the number of proof-of-stake digital assets, there has also been a consequent increase in value locked in staking platforms. Currently, the value locked in DeFi staking platforms is between $21-$23 billion, and similar growth is expected in 2021. In this guide, we will look at crypto staking in detail as well as the best crypto staking providers in 2021.
Cryptocurrency Staking Explained
Proof-of-Stake and Proof-of-Work are the two principal means of achieving consensus in blockchain networks. Unlike PoW, which involves mining, which requires computer-intensive processing, PoS networks require network participants to achieve distributed consensus by staking the network’s native assets.
Stakers function to validate transactions on the network where the winning validator is selected via a combination of random selection as well as the amount a participant is staking. Once the winning staker validates the transaction, they receive a reward in the form of new coins. The amount staked functions as collateral for validating transactions.
In simple terms, crypto staking is essentially holding or locking funds in a crypto wallet to participate in validating transactions and securing a PoS-based blockchain network. In return, stakers are incentivized for validation transactions or finding a new block based on the token they’ve staked.
How do Staking Platforms Come in?
Cryptocurrency staking is quite technical and requires stakers to have a bit of technical knowledge to be successful. Besides, stakers need to be online 24/7 to maximize their chances of earning rewards. This may be demanding for ordinary individuals who may not understand the technicalities of crypto staking.
As a result, staking providers, also commonly referred to as staking-as-a-service platforms, allows for a more seamless staking experience, significantly helping non-technical crypto investors to stake.
Staking platforms essentially lower the technical barrier to staking by acting as a third-party service provider that takes care of the technical aspects of the staking process and validates stakes on behalf of investors. In return, the staking platforms charge a fee, which is usually a percentage of the staking rewards.
Top Cryptocurrency Staking Providers in 2021
By charging a percentage of your staking rewards, staking providers make staking seamless and allow anyone to participate in the crypto staking process. Here are the top five cryptocurrency staking providers in 2021.
Binance is one of the most popular…