12 Best Crypto Coins to Stake in 2023 to Earn Passive Income
After the Ethereum transition to a Proof-of-Stake (PoS) consensus mechanism, the hype around crypto staking surged again. But staking Ethereum isn’t everyone’s cup of tea. Some people prefer to spread their bets. That is exactly why we’ve put together this list of best crypto coins to stake in 2023 (including Ethereum), where we break down all the exciting staking opportunities out there right now and how to go about staking them.
But first, let’s quickly address the factors that help us choose the “best”.
How to Choose the Best Crypto Coin to Stake in 2023
If you’re new to crypto staking, you might think the coin offering the highest staking rewards is the best. But that is not always the case. It’s crucial to zoom out and consider factors that decide your chances of enjoying consistent, long-term staking rewards instead of irregular, short-term earnings.
Fundamental Analysis: Choosing a coin with strong fundamentals ensures stability, security, and long-term viability for staking. Solid technology, active development, a clear use case, and a committed community increase the chances of consistent rewards and growth. This may also include factors, like market cap, token supply, liquidity, etc. Read our guide on fundamental analysis to do it right.
Token Price and Volatility: High volatility can lead to unpredictable rewards and even potential losses. Hence, considering the historical price volatility of the cryptocurrency is essential when choosing the best crypto coins to stake.
Staking Rewards: Annual Percentage Yield (APY) represents the total potential return on a staked asset over a year, including both interest earned and compound interest. Although a higher APY indicates greater potential for earnings, you must also consider the other factors mentioned.
Minimum Deposit and Lock-Up Periods: Understand the minimum staking requirements, such as the minimum number of coins needed to participate and the duration of the staking period. Some networks may have higher minimums and fixed lock-in periods, during which you won’t be able to access your staked funds, while others have lower minimums and flexible lock-in periods.
Network Security and Reliability: A secure network ensures your staked coins are safe from potential attacks or vulnerabilities. Look for well-established projects with a good development team, robust track record, and a sizable community of users and developers.
Ease of Staking: Consider the staking process. Is it simple or super complicated? Also, can you stake it on trustworthy platforms? If it’s easy to stake and available on reliable sites, it’s way more convenient and safer for investors.
Now that you know what factors to consider when choosing a crypto staking coin that aligns with your goals and resources, let’s dive straight into the list.
1. Ethereum
Ethereum’s unique proposition lies in its ability to execute self-executing smart contracts, enabling developers to create a wide range of applications, from decentralized finance (DeFi) protocols to non-fungible tokens (NFTs).
However, recently during the Ethereum Merge, it transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism, opening the doors for staking opportunities. Since then, Ethereum has garnered $23 billion in Total Value Locked (TVL), making it one of the fastest-growing and best crypto coins to stake in 2023.
You can directly start staking ETH using their official platform, but that would require a minimum deposit of 32 ETH (roughly $58,000), part of the reason why many investors avoid staking ETH. Alternatively, you can use popular wallets and exchanges, like Binance, Coinbase, OKX, Crypto.com, etc., to get started with lower minimum stake amounts.
The estimated APY for staking ETH varies based on factors like network participation, market conditions, and different platforms but usually ranges from 3% to 8%.
2. Binance Coin
Created by Binance, one of the largest and most influential crypto exchanges, BNB has surged in popularity due to its utility within the Binance ecosystem and beyond.
Historically, BNB has exhibited remarkable performance, attracting both traders and investors. Its innovative projects like Binance Smart Chain (BSC) have further solidified its position in the market.
But what about staking?
Binance Coin has also done tremendously well on the staking front, with a consistently impressive TVL of $3.15 billion and APY of 5% to 10%, making it one of the best crypto coins to stake in 2023.
Binance’s native platform, Binance Staking, offers a hassle-free way to stake your BNB. Other than that, KuCoin and Crypto.com also support staking for BNB.
3. Solana
With its lightning-fast transactions and low fees, Solana has attracted the attention of developers and users alike and made it a notable competitor to Ethereum. Its ecosystem includes many decentralized applications and NFT projects, contributing to its meteoric rise.
By participating in Solana’s Proof-of-History (PoH) consensus mechanism, you help maintain the network’s speed and security while earning rewards in return, very similar to how Proof-of-Stake (PoS) works.
You can easily stake Solana on any of the best crypto-staking platforms, like Coinbase, Binance, Crypto.com, and Kraken. For those interested in decentralized platforms, SolFlare, Phantom Wallet, and Atomic Wallet also provide seamless solutions.
The estimated APY for staking SOL ranges from 2% to 8%, with a minimum deposit requirement of around 1 SOL. Solana is one of the best crypto coins to stake, and its TVL of $310 million reflects that.
4. Polygon
With its multi-chain architecture, Polygon empowers developers to create fast and low-cost dApps while benefiting from Ethereum’s security. Its popularity has soared due to its ability to enhance user experience and address congestion issues.
For those eager to stake MATIC, platforms like Polygon’s official staking interface and other popular exchanges, like Binance and MyCointainer, offer accessible options.
The estimated Annual Percentage Yield (APY) for staking MATIC typically ranges from 4% to 6%, and you can start by staking a minimum of 1 MATIC. Moreover, a $869 million Total Value Locked in MATIC shows why it’s one of the best crypto coins to stake.
5. Cardano
Founded by Charles Hoskinson, also the co-founder of Ethereum, Cardano is a third-generation blockchain that has garnered immense attention in the DeFi space for its focus on scalability, interoperability, and sustainability.
To stake ADA, you can choose from a variety of stake pool operators through Cardano’s official wallet, Daedalus, or the Yoroi wallet. Of course, you can also use popular centralized platforms, like Binance and Kraken, to stake Cardano.
The estimated APY for staking ADA can vary, generally ranging from 4% to 7%, with a minimum deposit requirement of 10 ADA. Cardano also has a TVL of $172 million, indicating a promising future with higher rewards.
6. Avalanche
Avalanche boasts a novel consensus protocol, Avalanche Consensus, which facilitates rapid transactions and dynamic network configurations. This innovation has catapulted Avalanche into the spotlight as a solution for complex decentralized applications and enterprise use cases.
You can easily stake AVAX on platforms like the Avalanche Wallet or Binance. The estimated APY for staking AVAX ranges from 5% to 9% and requires you to lock a minimum of 25 tokens to get started.
It also has an impressive $610 million TVL in AVAX, making it one of the top contenders for the best crypto coins to stake.
7. Polkadot
With its unique parachain structure, Polkadot empowers various blockchains to operate together, enabling efficient data sharing and collaboration. And as we know, it employs a Proof-of-Stake (PoS) consensus mechanism, allowing stakers to contribute to the consensus process and earn rewards in return.
For those interested in staking DOT, platforms like Polkadot.js and Trust Wallet provide user-friendly interfaces.
The APY for staking DOT is typically higher than other coins on this list of best crypto coins to stake, ranging from 9% to 20%, subject to market conditions and platforms. However, the minimum stake requirement is also notably high at 326.979 DOT. Nevertheless, you can easily navigate this threshold using platforms that facilitate pooled staking.
8. Tezos
Tezos offers a self-amending mechanism that allows the network to evolve without contentious hard forks and utilizes a Liquid Proof-of-Stake (LPoS) consensus mechanism. This approach has garnered attention for its ability to incorporate upgrades smoothly, ensuring the platform remains relevant and secure.
For those keen on staking XTZ, user-friendly platforms like Binance, Kraken, and Atomic Wallet provide decent options. The estimated APY for staking XTZ can vary, generally ranging from 4% to 7%, and has no minimum staking requirement. Additionally, a $55 million TVL in XTZ reflects the growing trust within the Tezos community.
9. Chainlink
Chainlink’s decentralized oracle network ensures accurate data feeds to smart contracts, unlocking the potential for real-world integration. This approach has established Chainlink as a linchpin in enabling secure and reliable interactions between on-chain and off-chain data sources.
You can stake LINK using Chainlink’s own user-friendly staking interface or reputable exchanges like Binance and KuCoin. The estimated APY for staking LINK typically ranges from 3% to 5%, with minimum staking of 1 LINK.
10. Cosmos
Cosmos’ innovative approach to inter-blockchain communication, facilitated by the Tendermint consensus mechanism, enables diverse blockchains to work together effectively. This unique architecture has positioned Cosmos as a driving force behind interconnected blockchain applications.
For those considering ATOM staking, user-friendly platforms like Cosmostation and various non-custodial wallets, like Atomic Wallet and Trust Wallet, offer easy access to participate. The estimated APY for staking ATOM typically ranges from 7% to 15%, and there are no minimum staking requirements.
Additionally, it has over $500 million worth of ATOM in Total Value Locked (TVL), further cementing its spot as one of the best crypto coins to stake.
11. Algorand
Algorand’s unique consensus mechanism, the Algorand Consensus Algorithm (ACA) employing Pure Proof-of-Stake (PPoS), prioritizes both decentralization and efficiency. This has positioned Algorand as a solution for various use cases, including financial and decentralized applications (DApps).
For those interested in staking ALGO, user-friendly platforms like Algorand Wallet and various exchanges, like Binance and Coinbase, offer accessible avenues.
The estimated APY for staking ALGO typically ranges from 6% to 15%, depending on different platforms, and requires a minimum of 0.1 ALGO to get started. Compared to others in this list, ALGO has a relatively low TVL of $51 million, but that might change with time.
12. Near Protocol
Near’s unique consensus mechanism, the Nightshade algorithm, prioritizes scalability without compromising security. This has positioned Near as a solution for developers seeking to build and deploy DApps offering high throughput and low latency.
The easiest and straightforward way to stake NEAR is through NEAR Wallet. Other than that, you can also use various exchanges, like OKX and Coinbase.
The estimated APY for staking NEAR typically ranges from 8% to 15% and requires no minimum stake amounts. As of now, NEAR only has $34 million TVL, indicating that it still has a long way to go to compete with other best crypto coins to stake.
FAQ
Which crypto has the highest potential?
In terms of staking, Ethereum has the highest potential regarding overall stability and future growth. However, crypto is a highly volatile space, and these speculations may change based on market trends and developments.
Which crypto gives the highest staking rewards?
Polkadot has the highest potential staking rewards of up to 20%. Others, like Solana and Avalanche, also have high potential staking rewards. However, these rewards can change based on network upgrades, supply and demand, and other factors.
Is staking crypto risky?
Staking crypto comes with certain risks that investors should be aware of. While it’s generally considered less risky than trading or investing in highly volatile assets, there are still potential downsides.
Price fluctuations of the staked crypto can affect the value of your holdings, and in some cases, the rewards might not outweigh potential losses. Moreover, technical issues, network vulnerabilities, and market shifts can impact earnings and the overall security of your staked assets.
Another notable risk is the potential for “slashing.” Slashing occurs when a validator behaves maliciously or fails to follow the network’s rules, resulting in a portion (or whole) of their staked funds being confiscated.
What are the tax implications of staking crypto?
Tax implications of staking crypto can vary based on your jurisdiction’s regulations. In many countries, like the US, staking rewards are generally considered taxable income, similar to mining or other forms of earning crypto. Hence, staking rewards might be subject to income tax.
It’s important to keep records of your staking activities, including the value of rewards received at the time of receipt. Tax liabilities might also arise when you sell or convert staked rewards to other assets or sell them. Check out our in-depth guide on staking taxes.