Top Staking Projects in 2021
Staking is all the hype in the crypto world right now. Gone are the days of investing in ICOs (Initial Coin Offerings) – these days, it’s all about staking projects.
To understand what staking is in crypto, and why investors and crypto enthusiasts are interested in staking projects, you must first understand Proof-of-Work and Proof-of-Stake. When launched in 2008, the consensus system chosen to secure the network was a Proof-of-Work algorithm. A Proof-of-Work algorithm relies on solving cryptographic problems with computational resources to secure the network and validate blocks. But it faces certain problems due to the heavy usage of resources to mine and reach consensus. As a result, Proof-of-Stake, or staking, was introduced as a way to solve the inefficiencies of the Proof-of-Work system.
Proof-of-Stake takes an entirely different approach to reach consensus. Proof-of-Stake algorithms rely on an election process that selects the node (participant) required to validate each block. The election process can be random or use various factors, including the number of coins held in the staking wallet, and the staking period of coins.
The other significant difference between Proof-of-Work and Proof-of-Stake algorithms come in the creation of cryptocurrencies and rewards for staking participants. With Proof-of-Work, miners receive newly created cryptocurrency as a part of the mining process’s rewards in the blockchain. With Proof-of-Stake blockchains, staking participants receive rewards through the transaction fees.
The Proof-of-Stake algorithm allows users to participate in the forging process of the blocks that make up the blockchain by locking coins as their stake. The size of this stake determines if an individual node will be selected to validate and forge the next block. The larger the stake, the greater the chance of becoming the next validators of a block and receive a reward. This is thus creating a self-sustained economy where the blockchain benefits from increased participation and participants benefit from simply holding the blockchain’s native crypto.
Why is Staking Popular?
Many investors and crypto holders who don’t want to trade crypto turn to staking instead. The primary benefit of staking is that you, as a holder, retain full ownership and control of your digital assets. You can withdraw them at any time and that will only result in loss of the staking reward but not the staked funds. Staking also offers a much safer way to receive passive income through a reward or forging system whereas trading carries significant risks.
That being said, not all staking projects are created equal. It depends on where and how staking takes place. Staking in a native wallet, for example, is the safest form of staking as you own your private keys. But not all staking projects support it. There is also third party wallet staking, which is a good option if you find a reputable wallet, such as: Exodus, Atomic, Huobi, Guarda, etc. The final option is Exchange staking but this is the least safe of the three as you don’t own the keys to your coins and therefore can lose access to them at any point.
Best Staking Projects in 2021
There are hundreds of staking projects but some stand out due to the length of their operation, size of the community behind it and the amount of the rewards. We have listed our picks for the top staking projects in 2021 below.
Tezos is the largest staking project at the moment, with over 80% of token holders staking. The majority of popular exchanges like Coinbase, Binance, and Kraken are currently supproting staking on their exchanges for this project.
The XTZ token is the native currency of the Tezos network and is created through the “baking” process. This is essentially the same as the forging process in Proof-of-Stake algorithms. Bakers put up deposits and receive…