Top 4 Staking Tokens for Passive Income in 2022
The cryptocurrency market has been showing a positive demand across all regions. There are a variety of investment options to enter the cryptocurrency market. Apart from trading cryptocurrencies and earning profits from arbitrage, investors can also generate passive income through DeFi staking tokens. Staking tokens refer to tokens that are based on the proof of stake (PoS) blockchain network. The tokens are used to validate transactions in the PoS blockchains. Once the transaction is validated, staking awards will be given to the holders of the tokens. The concept of staking is like earning interest from holding tokens for a certain time. The process requires investors to keep the assets in a crypto wallet for a period of time, and the staking rewards will be given to the holder of the asset. The amount of the staking rewards given depends on the staking platform and the number of tokens kept in the wallet.
In the following, we will be talking about four popular DeFi staking tokens that might be helpful in staking for passive income!
Read More: The Best 4 DeFi Staking and Rewards Platforms
Ethereum 2.0 – Staking one of the most popular cryptocurrency providers
Ethereum 2.0 is one of the best-known cryptocurrency providers in the industry. On the PoS, more than $12 billion in ETH have been staked. The awards from staking Ethereum 2.0 range from 5% to 21% depending on platforms, which provides a significant gain of rewards potentially among all the other DeFi staking tokens. In order to stake this token, investors should have at least 32 ETH in the wallet for that. If you are a staking beginner, you might want to start staking from one of the largest coins. Also noteworthy that ETH 2.0 is the upgrade of ETH, which relies on the PoS instead of Pow. However, it is not sure when the upgrade will be completed, meaning if you stake ETH 2.0, you can only unstake it when the full ETH 2.0 is released.
AAVE- One of the Best DeFi Staking Token Choice
AAVE is the native governance token of the Aave protocol, which is a decentralized non-custodial money market protocol where users can participate as depositors or borrowers. You can stake your AAVE tokens by depositing them to the protocol Safety Module of the Aave protocol. Stakers who stake their tokens through the Safety Module will be rewarded the Safety incentives as well. Also bear in mind, the Safety Module will take up to 30% of your assets locked to cover the deficit.
Polkadot – Earning Annual Awards From a Well-performing Token
Polkadot (DOT) is again a well-performing token in the crypto market, especially recently. The reason Polkadot will be one of the best choices for staking is not only because it is a strong token, but also because it works under the multi-chain technology created by Ethereum co-founder Gavin Wood. It has secure communication between other blockchains, such as the ones for Bitcoin and Ethereum. The minimum amount for staking is 40 DOT, and the annual awards are around 14%. Polkadot staking is available on major crypto exchanges which offer staking options, for instance, Binance and Kraken.
Terra – Another Stablecoin Option For Staking Stability
Terra (LUNA) has been a popular stableocin option that is performing well in the market in recent years. It is a token under the ecosystem’s governance of the Terra network. Like Tether, both tokens are stablecoin which has a relatively lower risk than other larger cryptos, so that the part of the volatility can be absorbed. In that case, stakers are likely to experience a less volatile situation while their assets are locked in the process. The staking rewards for $LUNA will be given annually, which will be up to approximately 12%.
It is also noteworthy that staking involves risk. Since cryptocurrency investment is volatile, if your assets are depreciated in the event, the rewards from staking tokens may not cover the losses. Also, you can always stop staking your assets from the blockchain, and it usually takes at least seven days to do so, varying on the staking platform used. But bear in mind, once you have staked your assets, your assets will be locked over a period of time that you have to wait until the completion of the staking.
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