The 6 Best Cryptocurrencies to Stake in 2022
As of November 10, 2022, the crypto market cap has been down by over 71% from last year's high of around $2.94 trillion.
This article has been updated in November 2022 to reflect the changes happening in the cryptocurrency industry. This information is not intended to be and does not constitute financial advice. Please do your own research and due diligence before investing in digital assets.
As of November 10, 2022, the crypto market cap has been down by over 71% from last year's high of around $2.94 trillion. This has led many investors to sell their coins and cash out their profits, in an attempt to avoid further losses.
However, others have been following a long-term investment strategy, holding onto their coins for several months - or even years - to achieve a positive ROI and increase their potential gains. In fact, if you held on to your BTC long enough, you could have made a profit on 3,991 out of 4,239 days.
For "HODLers," staking is an excellent strategy to maximize their earnings and minimize their losses by generating a passive income on the coins they hold in their portfolio. At the same time, staking stablecoins (also known as “lending”) exclusively is a relatively low-risk way to make revenue even in a bear market, as you don't have to worry about how falling prices may impact your holdings.
In this article, we have collected the best 6 cryptocurrencies to stake in 2022 and beyond. Are you ready to get started?
Staking in Short
Before we jump right to the coins you can use to earn money, it's essential to briefly recap what staking is within the crypto industry.
In the simplest terms, staking means locking up your tokens in your wallet, an external address, or a smart contract for a specific time. During this period – which can range from a few minutes to multiple years –, your coins will do all the work for you and earn you yield based on the sum you dedicated for this activity.
Unlike your savings account at a bank, staking providers, DeFi protocols, and blockchain networks won't lend your staked funds to others or invest them in different assets. Instead, blockchains utilizing the Proof-of-Stake (PoS) consensus mechanism or its variants (e.g., DPoS, NPoS) will use your coins as collateral to validate blocks or to delegate or nominate your crypto to validators within the ecosystem.
In exchange for securing the network, stakers and also their nominators and delegators who have successfully verified blocks receive rewards from the network. At the same time, decentralized finance (DeFi) platforms reward liquidity providers in a combination of native tokens and a pool's trading fees for staking their LP tokens (thus, supplying and keeping their liquidity on the platform).
Unlike mining via Proof-of-Work (PoW) blockchains, stakers, with some exceptions, don't have to operate high-end and expensive equipment to earn validator rewards. In most cases, they only have to run a node via a simple computer device or a smartphone and dedicate some of their coins to the activity for a specific amount of time.
However, this is only required if you want to stake tokens as a validator. For delegators, nominators, and DeFi stakers, you have a much easier job – just select a staking provider, lock up your coins, and collect the yield after your digital assets.
What Are The Best Cryptocurrencies For Staking?
Now, as we have recapped the essentials about staking, let's explore the top cryptocurrencies you can stake to generate a passive income.
In the sections below, we have named 6 digital assets stakers may find enticing. Each offers unique features, such as high yield, low risks of volatility, and access to a wide range of benefits within a full-fledged crypto ecosystem.
As a side note, we have utilized Staking Rewards and the official websites of projects (when applicable) to collect the data on the coins we have included in this article.
Let's see them!
1. The Graph (GRT)
Average APR: 98.52% (indexers) - 198.79% (delegators)
While public and permissionless blockchain networks like Bitcoin and Ethereum operate in a decentralized manner, there are still processes where developers have to resort to traditional central server-based methods to run their dApps.
One of these processes includes indexing and querying data from blockchain networks and peer-to-peer distributed protocols like IPFS. To achieve these, projects have to utilize proprietary indexing servers, which is a resource-intensive task that could pose a security risk due to the centralized nature of the procedure.
The Graph is a cryptocurrency project that has designed a viable solution to the above issue. With a decentralized indexing and querying protocol, dApp developers can leverage the Graph's open-source and immutable APIs (called subgraphs) to eliminate centralized servers' single point of failure. As a result, Web3 projects can potentially achieve true decentralization while running their applications as well as reduce the workload for their teams (as they don't have to design and operate custom indexing servers).
The Graph has a native token called GRT that features an excellent APR for stakers. In fact, it is one of the best among the top 100 coins by market cap. You can either choose to delegate your tokens to indexers - validators operating nodes to index data and serve queries - or become an indexer yourself.
While the first option can come with hefty commissions (nearly 60% on average) for staking providers, it features a much better APR as well as lower risks and complexity than staking GRT as an indexer.
2. Axie Infinity (AXS)
Average APR: 74.1%
Axie Infinity is not just a key player in the Play-to-Earn revolution, but it's also among the most popular blockchain games on the market. In fact, when we explored how P2E games make money earlier on AAX Academy, Axie scored second place among the most profitable dApps and blockchains with a $1.3 billion annual revenue.
In short, Axie Infinity is a P2E-based blockchain game and metaverse where players can collect, breed, trade, and battle with cute Pokémon-like creatures called axies that are represented on the distributed ledger as NFTs.
AXS, Axie Infinity's native cryptocurrency, has been playing an important role in the project's ecosystem. One of its main functionalities includes staking that users can leverage to generate a highly competitive passive income.
AXS is quite easy to stake, as you only have to move your coins to a wallet on the Ronin sidechain and lock them up using the platform's official dashboard.
3. Binance USD (BUSD)
Average APR: 8%
Binance USD (BUSD) is a stablecoin that is pegged on a 1:1 ratio to the US dollar. Paxos and Binance exchange issued BUSD together on September 2019. It was designed to allow investors to hold a stable and low-volatility asset on the blockchain. In addition, the New York State Department of Financial Services (NYDFS) has also approved the token.
Since its launch, BUSD has grown tremendously. The stablecoin is ranked as the third-largest stablecoin in market cap, cementing a spot among the top ten largest cryptocurrencies. Currently, the token has a circulating supply of 22.9 billion coins, with no limit on maximum supply.
BUSD is an ERC-20 token backed by the Ethereum blockchain. In addition, it supports BEP-2, which means that BUSD can be used on both Ethereum and the Binance Chain, allowing users to move their BUSD from one blockchain to another. Furthermore, thanks to its stablecoin features, BUSD enables investors to avoid price fluctuations in crypto markets. Those that are risk averse can therefore earn a steady APY with BUSD. Alternatively, the stablecoin can be used for arbitrage purposes.
Due to the TerraUSD downfall, Paxos has taken additional measures to ensure transparency among its consumers, specifically relating to the assets designed to back BUSD. As of now, the assets that back BUSD include:
Cash equivalents (96%)
U.S. Treasury bills (4%)
The BUSD coin is now available across multiple platforms, wallets, and decentralized and centralized exchanges, including AAX.
4. USD Coin (USDC)
Average APR: 80% (lending)
If you want to keep your risks at a minimum while staking a cryptocurrency, then a stablecoin might be the best choice for you.
While you can't stake most of the stablecoins, you can lend them to other users via overcollateralized loans (as users can borrow much less than their collateral, lenders don't have to face risks of non-paying borrowers and defaults).
For today, we have selected USD Coin (USDC), where you can earn an AOR of up to 80% on AAX.
With the volatility of the digital assets industry, staking stablecoins is a way to earn income while lowering the risk to your portfolio. USDC is a stablecoin created by Circle in September 2018 that is known to be fully backed by the US dollar. Every unit of USDC in circulation is backed by $1 held in reserve that comprises a mix of cash and short-term US Treasury bonds.
Lending your USDC is relatively easy and involves the lowest risks among all the coins we have listed in this article. To do so, connect your wallet to a platform that supports the stablecoin such as AAX, and deposit USDC to the platform to start earning rewards.
5. Polkadot (DOT)
Average APR: 14.02% (delegators) - 14.73% (validators)
Polkadot is a blockchain interoperability platform that aims to connect otherwise isolated chains so they can communicate and work together in the Web3 world.
For that, the project utilizes a unique architecture consisting of the main relay chain, independent yet interconnected and parallel parachains, less-busy parachain-like blockchains called parathreads, and dedicated bridges responsible for connecting Polkadot with other DLT networks.
Interestingly, the team recently reached one of its greatest milestones after approximately six years of development, in which the project successfully auctioned the first dedicated slots for parachains. To learn more about this, we highly recommend checking out our article about the slow rise of Polkadot on AAX Academy.
Like the other cryptocurrencies we have included in this article, Polkadot's DOT token can be staked, as the blockchain utilizes the Nominated Proof-of-Stake (NPoS) mechanism to reach consensus among validators.
While the rewards are much more conservative than for the coins we have explored earlier, you have to take into account DOT's $20 billion market cap, which is the 11th highest among all digital assets.
To stake DOT, the easiest way is to delegate your tokens to validators (by nominating them via a staking provider). If you want to avoid fees at third-party solutions, you can choose to become a validator. However, that option requires users to stake a minimum of 350 DOT for at least 28 days (and also involves more technical complexity).
6. AAX Token (AAB)
Average APR: 3% (flexible) - 8% (fixed)
In addition to the previous five coins, we have included our own AAX Token (AAB) as an extra addition for stakers.
As you may already know, AAX is an institutional-grade, LSEG-powered cryptocurrency exchange trusted by over 2 million digital asset investors worldwide. In addition to ultra-low latency trades, highly competitive fees, and state-of-the-art security, we have developed a full-fledged crypto ecosystem around our primary trading platform, including savings products, derivatives support, DeFi mining, a launchpad, and many more.
As our native token, AAB powers the whole AAX ecosystem, which we designed to benefit our users. As a deflationary token featuring a maximum supply cap of 50 million coins, we have used 100% of our platform's future revenue to burn 50% of the total AAB supply to give a boost to its purchasing power.
You can use AAB for many things – from accessing launchpad sales and DeFi yield farming to getting a trading fee discount of 20% on both the spot and derivatives markets.
Most importantly, AAB can be staked in a beginner-friendly way via our Savings product, where you can choose between flexible and fixed contracts. While the latter offers a higher APY, the prior option lets you withdraw your coins at any time without a mandatory lock-up period.
Furthermore, if you haven't used our Savings service before, we have a first-time exclusive offer for you that will earn a 60% APY on your AAB for seven days.
Share this article