Introduction
It’s said that the average millionaire has 7 streams of income.
What if you could create 8 new streams of income today:
- Without having to get another job
- Without having to start a business
- Without managing a property
- Without researching stocks
- Without writing a book
- Without making a loan to someone
- … and from the comfort of your home?
That’s pretty much everyone’s dream.
Thanks to new innovations in the cryptocurrency space, namely the rise of staking, this is already a reality for some crypto investors.
Staking is the process by which crypto investors stake, or lock up as collateral, crypto assets in order to help secure blockchain networks by periodically validating transactions. For their contributions to the network, stakers are periodically paid in newly minted crypto assets and/or transaction fees.
In many cases, staking requires minimal setup or technical know-how, as opposed to mining, another form of securing blockchain networks that is usually very technical and requires physical equipment.
In this post, we’ll tell you what a proof of stake coin is as well as the best proof of stake coins so you can kick back and have that easy passive income start rolling in!
What is a Proof of Stake Coin?
A proof of stake (PoS) coin is a crypto asset that uses staking as its transaction validation mechanism. The opposite would be a proof of work (PoW) coin, which uses mining as its transaction validation mechanism. For more information on the difference between PoS and PoW, check our Proof of Work vs. Proof of Stake article.
Tezos (XTZ): ~5% Yearly Interest
The first in our list of the best PoS coins is Tezos, a blockchain platform similar to Ethereum.
Tezos differentiates itself by focusing on fixing governance issues that plague the likes of Bitcoin and Ethereum.
Bitcoin and Ethereum don’t have formalized governance processes to make decisions on things like network upgrades. This has led to splits, or forks, over disagreements about a blockchain’s development. One famous example is Bitcoin vs. Bitcoin Cash.
Tezos, on the other hand, allows stakeholders to vote for network changes. And it’s not only governance that Tezos stakeholders get to take part in but staking rewards, too. Tezos pays stakeholders ~5% interest in XTZ a year (check Tezos Nodes and Baking Bad for the latest rates).
Here’s a quick guide on how to start earning Tezos.
Ethereum (ETH): ~4% Yearly Interest
Did you know that you can now stake Ethereum?
Ahead of the network's move to a proof-of-stake consensus, you can lock up your ETH until Ethereum 2.0 goes live.
The APR is quite modest, at around 4%, but Ethereum is one of the few cryptocurrencies that you can almost guarantee will still be around in 5 years time, so helping to secure the network in exchange for valuable ETH seems like a no-brainer.
To become an Ethereum validator, you'll need a minimum of 32 ETH and some knowledge of how to run a validator.
If you don't have 32 ETH, no need to worry. Some centralized exchanges like Kraken and Binance will delegate any amount of ETH on your behalf, so that you can still earn rewards.
Polkadot (DOT): ~13% Yearly Interest
The native token used on the Polkadot network is DOT, and it serves several purposes:
- Staking - Investors have to hold DOT in order to stake on Polkadot. As of publication the staking reward is around 13%. Information about the current staking reward is available here
- Bonding - Polkadot parachains (similar to shards) have to be rented by dApps that wish to build on the network. In order to rent a parachain projects have to raise and then bond more DOT than other projects who are competing for the same parachain.
- Governance - DOT token holders have governance privileges over the platform. For example, they can vote to approve upgrades or even change network fees
- Investing - DOT holders can send their tokens to new projects that wish to build on Polkadot, and receive rewards for the duration of the loan period (usually 1-2 years). The best part is that, after receiving rewards throughout the loan period, you then get all your DOT back at the end! The downside is that you cannot earn staking rewards on your DOT during this time.
Solana (SOL): ~8% Yearly Interest
Solana's initial inflation rate is 8%, which is the reward that is handed out
Any amount of SOL can be staked, and your rewards will typically start rolling in after 2 epochs on the Solana blockchain (approx 4 days).
Solana also utilizes a Proof of Stake (PoS) blockchain, which means that the blockchain communicates through various nodes that are distributed all around the world.
Staking tokens on PoS means that you are contributing to these nodes and helping the blockchain run more efficiently, which is why you are then rewarded with a percentage of the transaction fees that are processed via your node.
The difference with Solana is that they mix this with their own Proof-of-History consensus, which is an innovative way of streamlining block times and speeding up transactions.
This short processing time is what makes the Solana blockchain so fast!
Find out how to stake your SOL tokens here.
Cosmos (ATOM): ~8% Yearly Interest
Cosmos is one of the most popular staking coins, up there with the likes of Tezos. While Cosmos itself - as opposed to Cosmos staking - isn’t as well-known as some of the other projects we’ve listed so far, Cosmos has a lot of potential.
The goal of Cosmos is to become an “Internet of blockchains” by connecting all the different blockchains out there. While there are thousands of crypto assets, there is no way to easily swap those assets between different blockchains.
So far, over 100 different companies are using Cosmos to build their own projects. That even includes Binance, the world’s biggest centralized exchange. Binance used Cosmos technology to build Binance Chain, their own blockchain project.
Cosmos staking rewards are high at around 8%. But the rewards could become even more valuable with Cosmos’ ecosystem growing by the day. To get started, check out this Cosmos (ATOM) staking guide.
Cosmos (ATOM) staking rewards calculator with latest interest rate
VeChain (VET): ~1% Yearly Interest
VeChain (VET) is another staking coin to consider. While the rewards aren’t high compared to other staking opportunities, the project might make up for its low yield with its future potential.
VeChain focuses on using blockchain technology for the supply chain, or the process of moving products and services from suppliers to customers.
Notable VeChain developments include VeChain’s work with BMW on VerifyCar, an application that addresses mileage fraud by recording car mileage on VeChain’s blockchain. Another is Deloitte, one of the Big Four accounting firms, announcing that it is using VeChain to develop blockchain solutions for its clients.
Luckily, if you want to take advantage of VeChain’s potential growth, VET staking is quite easy. Just hold VET in a wallet that supports VeChain and you will receive VTHO, which is used to pay for network transactions.
Exodus makes it super easy to claim those VTHO rewards! Simply enable VET and VTHO in your Exodus VeChain wallet and you’re good to go! All you have to do is hold VET and check your wallet occasionally for new VTHO rewards.
For the latest VET staking rewards, check Staking Rewards’ VET page.
Ontology (ONT): ~20% Yearly Interest
Ontology coin (ONT) is the cryptocurrency that powers Ontology. Ontology emphasizes identity security and data integrity (accurate and consistent data). Therefore, Ontology’s target market is businesses who want to use blockchain benefits like smart contracts while retaining control of sensitive data.
Using Ontology, businesses can also build their own blockchains - each with their own rules and specifications - on top of Ontology’s main blockchain. Therefore, businesses get to benefit from blockchain in a way that makes sense to them while also choosing what data they share with the main, public Ontology blockchain.
The team behind Ontology is the same team behind NEO (Onchain). Onchain not only developed NEO but is very influential in China.
As with NEO staking, Ontology staking is very easy:
Ontology currently pays about 20% annual ONG interest but check ONTCalc for the latest interest rates.
Theta (THETA): ~1% Yearly Interest
Theta network, which aims to be a kind of decentralized YouTube, uses two tokens: the THETA coin and TFUEL.
Holders of the THETA token can take part in governance by staking THETA, and either contributing to or running their own node. For this, they are rewarded with more THETA tokens.
If the Theta network grows to be as large as YouTube, proper on-chain community governance will become extremely important, in order to avoid the lack of transparency exhibited by social media platforms such as Facebook.
Shortly after launch, the Theta team realized that they also needed a highly liquid token that could facilitate millions of transactions and micropayments each day, and that’s why Theta Fuel, or TFUEL, was created.
As well as being used to reward viewers who share their extra bandwidth, advertisers can use TFUEL tokens to reward engagement from viewers.
Theta rewards are quite low, at a fixed inflation rate of 1%, so it's probably only worth it if you a validator with a large amount of tokens, or a believer in the project who is HODLing THETA anyway.
How to Buy the Best Proof of Stake Coins Easily
Looking to get your hands on some of the best proof of stake coins and start earning staking income?
If you already have crypto
If you already have crypto assets, Exodus crypto wallet allows you to exchange (mobile exchanging tutorial) for all the proof of stake coins on this list right from your wallet, without having to create an account.
If you don’t have crypto
If you don’t have crypto, you can use services like Cash App or Coinbase to buy BTC before exchanging for your preferred staking coin(s) in Exodus.
Regardless of where you buy your staking coins, it’s generally a good idea to store them in your own wallet and not a centralized exchange’s, since centralized exchanges have a history of getting hacked or otherwise losing your funds.
Conclusion
So there you have it - all the best proof of stake coins to earn effortless passive income!
Looking for other ways to earn money on your crypto? Our crypto dividends article has even more crypto passive income opportunities, including ways to earn US dollar stablecoin passive income without crypto’s usual volatility!
