Top Staking Tokens by Market Capitalization

What Is Staking in Crypto? How Do You Earn Rewards via Staking?

Cryptocurrencies that are based on a proof-of-stake protocol enable users to earn interest via staking rewards. Similar to how a bank may pay you interest for keeping money in your account, blockchains that operate on a PoS protocol will reward you for staking coins in your wallet and participating in the blockchain as a validator.

Staking is a fundamental component of tokens that operate a PoS network. By staking a token, you are assisting the transaction verification process. When staking tokens, you are required to keep the tokens in your cryptocurrency wallet for a designated period of time. Occasionally, a staker will be randomly selected to validate a batch of blockchain transactions. The staking reward is proportional to the holding amount — this means that those who stake more coins are likely to earn more. Some coins like Ethereum even have a large minimum staking requirement, requiring users to invest 32 ETH (a rather hefty sum) before they can stake as a full validator.

If a user fails to do their job correctly and validates illegitimate transactions, then their staking holdings will be “slashed” and they can lose some of their staked tokens. Some cryptocurrencies allow users to stake by themselves, while others require them to commit their stake to a staking pool, which can be beneficial to those who are unable to invest a lot of money. Furthermore, depending on the token, stakers may have to wait a vesting period before they can take their money out or reinvest.

In recent years, there has been an influx of coins using this underlying consensus model, permitting users to invest in cryptocurrencies without mining. Staking is particularly attractive to those who wish to reap rewards without paying for expensive mining equipment. Moreover, because staking doesn’t involve massive expenses, some see staking as a low-risk and thus relatively safe investment with a low barrier to entry.

In short, crypto staking has become a popular mechanism for earning passive income and is a feature available on most crypto exchange platforms including Coinbase, Binance and Kraken. The most popular blockchain platforms that allow staking include Ethereum, Cardano and Solana. In fact, when it comes to Cardano and Solana, most of their token value comes from staking.

Is Proof-Of-Stake Better Than Proof-Of-Work?

Proof-of-stake (PoS) tokens have been lauded due to their energy efficiency, especially when compared to tokens that use a proof-of-work (PoW) mechanism. Instead of requiring computers to solve cryptographic equations as with PoW based tokens, PoS simply requires users to hold and stake tokens to help create and validate new blocks. Thus, PoS tends to be seen as a cheaper and faster method of verifying transactions, while also presenting a more environmentally friendly option. However, because proof-of-stake is a newer protocol, its long term security is still up for debate. Major tokens like Bitcoin still operate on a PoW protocol with no intent to transition, though Ethereum has announced plans to switch to a PoS protocol in the near future. Check out a more detailed comparison of PoS and PoW on CoinMarketCap Alexandria.

CoinMarketCap provides real time data on the top staking tokens based on their current market capitalization. Be sure to research the rules and reward policies of each individual token before you decide to stake.