Staking cryptocurrency has become a popular method for crypto investors to earn “interest income” on their digital asset holdings that can be staked, referred to as PoS (Proof-of-Stake) coins. More on that later. From an investor’s point of view, staking can be viewed as similar to investing in fixed income securities, such as bonds or money market funds, although with more risk to principal loss or fluctuation in the underlying digital asset being -staked.
In this article, you will be introduced to the concept of staking, how staking-as-a-service platforms work, and a guide to the best staking service providers in 2020.
What is Staking?
In the cryptocurrency world, staking refers to “locking up” a digital asset by “staking” it, agreeing to hold it in a wallet on its respective blockchain network. By agreeing to stake some or all of your holdings you are helping to ensure the blockchain the assets are staked on, operates correctly and securely. In exchange for helping to secure a blockchain network, participants who stake their coins, receive a share in the block reward in the form of newly minted coins.
Staking is an integral part of a Proof-of-Stake (PoS) consensus mechanism. Proof-of-Stake requires network participants to stake the network’s native asset to achieve distributed consensus. Block rewards are attributed to stakers using a combination of random selection and the size of the stake (measured by the number of tokens) that have been provided.
Unlike its predecessor, the Proof-of-Work (PoW) consensus algorithm, which has been made popular by Bitcoin, PoS does not require machines to make energy-intense calculations to solve a puzzle. PoS is, therefore, considered a more environmentally-friendly alternative, and many consider it as the future of consensus protocols.
What Are Staking-as-a-Service Platforms?
Staking-as-a-Service platforms enable crypto investors to stake their stakable PoS digital assets via a third-party service that takes care of the technical aspect of the staking process. For this service, platforms charge a fee – usually a percentage of the staking rewards.
The idea behind Staking-as-a-Service platforms is to enable anyone – even those without technical knowledge – to take part in the staking economy. They lower the (technological) barriers to entry so that anyone can earn tokens by providing them as a stake in a PoS network. The use of third-party staking services is often referred to as “soft staking.”
Additionally, to pure staking-as-a-service platforms, several leading exchanges have also launched staking services, dubbed “exchange staking.”
Exchange staking enables investors to leave their PoS stakable assets in their trading account’s wallets to earn “interest” in the form of fresh tokens. The exchange handles the technical side of the process and (usually) charges a small percentage fee for that service.
List of Staking-as-a-Service Providers
To help you find a service provider that you could potentially use to soft stake cryptocurrency, we have composed a list of the most reputable staking-as-a-service providers.
We have split our list into staking-only platforms and popular exchanges that also offer staking.
Top 7 Staking Service Providers
Canadian staking-as-a-service provider Figment Networks offers “institutional grade infrastructure, software & tools for token holders and stake-based blockchains.”
Stakable Assets: Tezos (XTZ), Livepeer (LPT), Horizen (ZEN), Cosmos (ATOM), IRISnet (IRIS), ICON (ICX), Algorand (ALGO), Aion (AION), and Kava (KAVA)
Staking Fees: 0-15%
Estonia-based MyContainer is a regulated staking-as-a-service provider that enables crypto investors to soft stake a wide range of PoS coins via an easy-to-use online platform.
Stakable Assets: Phore (PHR), PinkCoin (PINK), Bitbay (BAY), CloakCoin (CLOAK), PIVX (PIVX), Particl (PART), NavCoin (NAV), OKCash (OK), Wagerr (WGR), and BlackCoin (BLK)
Staking Fees: 9%
France-based Stake Capital “provides financial instruments and services on top of the leading DeFi and staking networks.”
Stakable Assets: Loom Network (LOOM), Cosmos (ATOM), Livepeer (LPT), Idex (IDEX), Tezos (XTZ), Kava (KAVA), and Aion (AION)
Staking Fees: 0-10%
South Korea-based Stake.Fish is a leading staking-as-a-service service that enables users to soft stake several different stakable assets.
Stakable Assets: Alogrand (ALGO, Loom Network (LOOM), Cosmos (ATOM), Livepeer (LPT), Tezos (XTZ), EOS (EOS), Kava (KAVA), and Aion (AION)
Staking Fees: 10-20%
New York-based Staked “helps institutional investors reliably and securely compound their crypto by 5% – 100% annually through staking and lending.”
Stakable Assets: Tezos (XTZ), Livepeer (LPT), Decred (DCR), and Cosmos (ATOM)
Staking Fees: 5-10%
Germany-based Stakinglab is a leading European staking-as-a-service provider enables users to soft stake and host masternodes for a variety of stakable digital assets.
Stakable Assets: Phore (PHR), PIVX (PIVX), Reddcoin (RDD)
Staking Fees: 7.5%
Germany-based Staking Facilities provides an enterprise-grade validator infrastructure for blockchain investors who want to stake PoS assets to (potentially) earn investment income on their digital assets.
Stakable Assets: Tezos (XTZ), Cosmos (ATOM), Aion (AION)
Staking Fees: 8.5-12.5%
Top 5 Digital Asset Exchanges That Offer “Exchange Staking”
Binance is arguably the leading digital asset exchange in the world. Despite being only three years old, the Matla-based exchanged has managed to establish itself as one of the go-to trading platform for retail traders. Additionally to launching its own blockchain, Binance Chain, the company also offers exchange staking for a large number of digital assets, including COSMOS, QTUM, and STELLAR.
Stakable Assets: Algorand (ALGO), NEO (GAS), Ontology (ONG), VeChain (VTHO), Tron (BTT), Kava (KAVA), Komodo (KMD), Stratis (STRAT), Qtum (QTUM), and Stellar (XLM)
Staking Fees: Zero
Coinbase is one of the largest digital asset companies in the world. The exchange and wallet provider offers a suite of different services, including an education platform, an automated investing feature, and, since recently, also a staking service.
Coinbase users can currently stake Tezos (XTZ) by leaving the tokens in their Coinbase wallet. Other stakable assets are expected to follow as Coinbase expands in universe of supported assets.
Stakable Assets: Tezos (XTZ)
Staking Fees: 25%
KuCoin is the pioneer of exchange staking. The Singapore-based exchange was the first trading platform to introduce soft staking in 2019. Users can currently stake a wide range of assets on KuCoin, including several that you will not find on other reputable platforms.
Stakable Assets: Algorand (ALGO) Aion (AION) Cosmos (ATOM) EOS (EOS) Tron (TRX) Internet of Services (IOST) Neblio (NEBL) DeepOnion (ONION) Energi (NRG) NULS (NULS) TomoChain (TOMO) EOSForce (EOSC) Loom Network (LOOM) Loki (LOKI) V Systems (VSYS) WAN (Wanchain) IoTeX (IOTX) Tezos (XTZ) Elastos (ELA) PIVX (PIVX)
Staking Fees: 10%
San Francisco-based Kraken is one of the most established digital asset exchanges in the market. The trading platform offers a number of leading altcoins, and has been a popular choice for both retail and professional traders for almost a decade.
In 2019, Kraken also joined the exchange staking market by offering a staking service for Tezos (XTZ). According to a company blog post, Cosmos and Dash staking are also in the works.
Stakable Assets: Tezos (XTZ)
Staking Fees: Zero
Poloniex is one of the most established exchanges in the world. Aside from its array of features for both novice and advanced traders, Poloniex also offers exchange staking.
Users can stake Cosmos (ATOM) tokens simply by leaving them in their exchange wallets.
Stakable Assets: Cosmos (ATOM)
Staking Fees: 25%
While staking can be an excellent way to earn income on your digital asset holdings, it is still a risky venture as the underlying digital asset values can fluctuate wildly, and as such, investors should never invest more in stakable (or any) digital assets than they can afford to lose.