Where to Stake Cryptocurrencies: The Best Staking Exchanges

Gianluca Lombardi, 10 min read
Last Updated: 24 March, 2023

staking return graphs checking on the beach

Step right up and explore the world of staking, a clever way to put your cryptocurrencies to work and earn some passive income. With some crypto exchanges offering staking services, you can avoid the technical nitty-gritty and let them handle the heavy lifting. But remember, you’ll be trusting your coins to someone else. So, it’s crucial to understand the ins and outs of cryptocurrency staking.

Should you take the plunge and stake your coins independently, or let an exchange do the work for you? Each option has its pros and cons, and we’re here to help you navigate those choices.

Since the 2017 and then 2021 crypto boom, most guys know about bitcoin mining, but there’s another way to generate new coins and tokens – by staking cryptocurrency.

Comparison of the best exchanges for staking

eToro

Bitstamp

Binance

Logo
etoro Logo
Bitstamp Logo
Binance Logo
Overview
Founded
2007
2011
2017
Headquarters
UK Cyprus flag
Flag of the United Kingdom
flag of Malta Hong Kong
Deposit methods
PayPal VISA MasterCard
bank transfer Skrill Neteller
crypto VISA MasterCard
crypto VISA MasterCard
Number of users
25.000.000+
4.000.000+
30.000.000+
ethereum LogoEthereum 2.0 staking
Annual return
5 - 6.25%
5 - 6%
5 - 6%
Repayment period
With the arrival of Ethereum 2.0
With the arrival of Ethereum 2.0
With the arrival of Ethereum 2.0
Minimum period
Until the arrival of Etherеum 2.0
Until the arrival of Etherеum 2.0
Until the arrival of Etherеum 2.0
Payment in
ETH 2
ETH2R
BETH
Automatic selection
More cryptocurrencies to stake
Annual return
Tron Logo TRX - 75-90 % of blockchain rewards
ADA Logo ADA - 75-90% of blockchain rewards
ALGO Logo ALGO 5%
DeFi staking:
BTC, ETH, BUSD, BNB, AAVE, DYDX,
USDT, USDC, SXP, LINK, HARD, XVS, DAI
1-25% annually
Repayment period
By the 14th day of the previous month
Every day
Every day
Minimum period
8-10 days
No
0-120 days
Automatic selection
Risk disclaimer
Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

What is cryptocurrency staking?

If you invest in cryptocurrencies, you would certainly have heard the term ‘staking’ a lot. Staking is how many cryptocurrency exchanges verify their trades and allow participants to make money on their cryptocurrency investments.

But what is cryptocurrency staking? It is a process of committing funds to cryptocurrencies to maintain the blockchain network and verify transactions.

It is available in cryptocurrencies that use a proof-of-stake model to process payments.

On the other hand, we have mining, which consists of verifying unconfirmed transactions and then enrolling them in a new blockchain. This process creates a new consensus that is shared with the entire network.
In recent years, however, more and more attention has been paid to the fact that mining has a very high energy cost, as the available computing power is crucial for the completion of a blockchain.

This episode, however, takes a different approach.

Participants do not have to validate transactions using enormous computing power, but participate with their own investment. In this way, the investment produces a return in the form of a reward.

However, not all cryptocurrencies can be staked. Bitcoin, for example, is based on a proof-of-work algorithm and does not support the staking of cryptocurrencies. Ethereum 2.0, the second largest cryptocurrency on the market, already supports staking.

Staking Ethereum 2.0

Ethereum 2.0 is a highly anticipated update that should improve the performance of the ETH network with a Proof of Stake mechanism (instead of the current Proof of Work mechanism). It is not yet known exactly when Ethereum will release this update, but it is expected that the ETH 2.0 blockchain will be operational within the next 12-24 months.

Staking on Ethereum is the process of blocking a certain amount of ETH – the cryptocurrency on Ethereum’s blockchain – for a certain period of time in order to contribute to the security of the blockchain and earn network rewards.

These participants are known as ‘validators’ or ‘stakers’ and are tasked with processing transactions, storing information and adding blocks to the Beacon chain, Ethereum’s new consensus model. As a reward for their active participation in the network, validators receive interest on the Ether-denominated cryptocurrencies they declare.

How does one become an Ethereum Validator and staking ETH?

Those who wish to use the new Ethereum network will have to create a node using Ethereum 1.0 and Ethereum 2.0. Ethereum clients are simply software that allow nodes to interact with the Ethereum network.

Compatible client software for betting nodes are:

Prysm: This is a Go language variant of the Ethereum software.

Nimbus.

Teku: It is an Eth2 software client designed for companies, written in Java.

Lighthouse: This client software uses the Rust programming language.

The minimum requirement is to have a computer with enough memory to download both Ethereum blockchains, old and new. Ethereum 1.0 contains about 1 terabyte of data and grows at the rate of about 1 GB per day.

Validators must also keep their nodes connected to the blockchain 24/7. A high-quality Internet connection is therefore a key criterion. Once the validation software has been installed on the computer, the next step is to block a minimum of 32 ETH at the address of the corresponding Ethereum pledge contract:

0x00000000219ab540356cbb839cbe05303d7705fa.

For this purpose, two keys must be generated: one for signing and approving transaction blocks and one for withdrawing funds. For the time being, however, it will not be possible to create a withdrawal key until the merger of Eth1.0 with Eth2.0 in 2022.

Before making a deposit at this address, you must visit the ETH 2.0 launch panel and follow the instructions therein.

This deposit is confirmation that you are applying for validator status. It also provides ways to ‘punish’ rogue validators who intentionally or accidentally undermine the validity of the Ethereum blockchain. When the blockchain notices inconsistencies in the actions of validators, it ‘cuts off’ the culprits’ responsibility.

Slashing is the term used to describe a situation where an Ethereum 2.0 validator deliberately violates network rules and is forcibly removed. As a penalty, part of the promised PF is also taken away, and in some cases the entire promised sum of 32 PF may be taken away.

Similarly, nodes that validate offline receive small penalties to encourage them to maintain their connection to the network. The protocol provides for penalties and rewards about every six and a half minutes.

How can I quote Ethereum on an exchange without going through the technical steps?

If the technical steps to become a validator seem too complicated, an alternative solution is to outsource this task to an exchange. The advantage of this solution is that you cannot make mistakes and get penalised, and you do not need to buy additional hardware or use clients to manage your nodes. The disadvantage of this solution is that once you send the ETH to an exchange for staking, you no longer control the private key, which is managed by the exchange.

Cryptocurrency staking with eToro

POTENTIAL PROFIT RATE BETWEEN 5 AND 6.25 PER CENT PER YEAR

Staking on eToro is a process that allows users who hold and keep supported cryptocurrencies to earn rewards. eToro executes bets on behalf of its users. The rewards are higher than those of cryptocurrencies, which means that users increase their holdings of cryptocurrencies through a mechanism similar to earning interest on money.

The petting operation of ETH 2.0 on eToro is similar to that of other cryptocurrencies, but with one important exception: all ETH will be blocked until ETH 2.0 is fully operational. This means that eToro users who choose to pledge their ETHs will earn additional ETH during the petting process, but in practice they will only have access to their pledged ETHs and accumulated rewards after Ethereum has launched the ETH 2.0 blockchain.

Bets on ETH 2.0 are only placed on the cryptocurrency wallet in the eToro Money app, which is another difference from the normal petting process.

Note that the launch date of the ETH 2.0 blockchain is solely at the discretion of Ethereum and is out of eToro’s control.

Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

CRYPTOCURRENCY STAKING: HOW IT WORKS

To start betting ETH, first download the eToro Money app.

You can then transfer ETHs purchased from the eToro investment platform to the cryptocurrency section of the eToro Money app. ETHs transferred to the eToro Money app cannot be transferred back.

Enter the amount of ETH you wish to bet (minimum 1 ETH), which will be automatically sent to your betting address. According to the Ethereum protocol, pledged ETH will be blocked until the ETH 2.0 blockchain is operational.

In the eToro Money app, you can check the status of your ETH 2.0 and the rewards accumulated in your cryptocurrency portfolio. Once the ETH 2.0 blockchain is launched, you will have access to your original assets and rewards.

CALCULATION OF REWARDS

Staking ETH on eToro helps protect the ETH 2.0 blockchain network and allows you to earn between 5 and 6.25 per cent per year on stacked ETH.

ETH 2.0 rewards are calculated by Ethereum based on the total amount of ETH committed. In your eToro Money cryptocurrency wallet, you will see all the rewards stacked for your staked ETHs, as well as the total amount of rewards for staked ETH 2.0.

In addition, you will receive an email each month informing you of the increase in the value of your ETH commitment.

Cryptocurrency staking: ADA and TRX

In addition to ETH 2.0, Cardano (ADA) and Tron (TRX) tokens can also be staked on eToro.
As an eToro user, you can receive rewards for staking if you hold any of the supported cryptocurrencies, with the exception of the following:

Per Cardano (ADA) and Tron (TRX): UK residents who registered on eToro on or after 8 February 2022 and all eToro users in the US.

For ETH 2.0: UK residents who registered on eToro as of 1 February 2022 and all eToro users in the United States.

It is important to explain exactly how the monthly reward allocation is calculated for all users with ADA or TRX staking.

Every day, at 00:00 GMT, a snapshot of each user’s balances is taken. It shows the units that are eligible for staking for all open positions of each user.

At the end of each month, the sum of all snapshots for the month is divided by the number of days in the month to obtain a daily average.
The daily average amount is the base amount on which the monthly reward for a user is calculated. The monthly cryptocurrency rate of return is calculated and the applicable member rate is added to the calculation:

  • bronze – 75%
  • silver, gold, platinum – 85%
  • diamond + – 90%

The prize amount must not be less than USD 1.

Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Staking cryptocurrencies with Bitstamp

HOW CAN I STACK ETHEREUM (ETH) USING BITSTAMP?

To staking ETH in Bitstamp, you must first convert it to ETH2, which you can do in the ‘Earn’ section of your account. Processing the transaction on the blockchain takes a certain amount of time, depending on the current demand on the network. During this time, the transaction will be marked as ‘pending’. Currently, the waiting queue for activation is 15 days.

WHEN WILL I START WINNING PRIZES?

With ETH2 in your account, you will immediately start earning prizes for your bets, as all ETH2s are automatically wagered.

In the case of ETH, we collect pledge assets from our customers in a pool and start a new pledge node every 15 minutes (they send the assets to the blockchain to start the pledge process). Beyond this (approximately) 15-minute queue, the blockchain can take time to process all the data. The time required depends on the amount of demand on the network.

FOR WHICH ACTIVITIES WILL I RECEIVE REWARDS?

Rewards from ETH bets are paid out in ETH2R (not ETH2). You will not be able to withdraw ETH2R from your account until the end of the betting period.

WHAT ARE THE REWARDS FOR BETTING ON ETH?

You can earn up to 4.66% per annum. Note that the rewards depend on the amount of bets placed and the amount of competition in betting on the blockchain.

For the latest information on wagering rewards, visit the earnings page.

CAN I EXCHANGE MY PLEDGES WITH ET2?

Yes, you can do so by visiting the website.

The ETH2/ETH trade is NOT available to US residents.

WHEN AND HOW ARE BETTING PRIZES DISTRIBUTED?

Prizes are paid out at the beginning of each month. Bitstamp collects the rewards once a day in a pool and distributes them to customers based on the amount of bets placed. You will also receive rewards in ETH2 on your main account. You will not receive rewards for ETH2 held in sub-accounts.

CAN I WITHDRAW MY REWARDS (ET2R)?

ETH bets have several unique technical features. Due to the way betting on the Ethereum blockchain works, it will not be possible to withdraw, trade or bet on rewards earned with ETH2 until the Ethereum 2.0 upgrade is completed. This could take until the end of 2023, so consider betting on ETH as a medium- to long-term investment!

CAN I TRADE, BET OR CASH IN MY REWARDS USING ETH2R?

As far as ETH is concerned, rewards earned will be completely locked in until the completion of the Ethereum 2.0 network upgrade, which could take until the end of 2023. Until then, rewards will accumulate in your account, but you will not be able to withdraw, trade or bet on them.

Once the lock-in period is over, the prizes from ETH2R bets will be converted into regular ETH and returned to your account. At this point, the same will happen to your ETH2 (the ETH you originally wagered).

Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

WHAT ARE THE RISKS OF BETTING ON ETHNO?

Participation is somewhat risky, as assets may not be readily available during the blockchain period. To minimise risks, Bitstamp implements preventive measures and employs proven node validators using a range of innovative client software.

Bets can result in losses of between 1 and 32 ETH2.
For events outside the control of the betting organisers, losses may not be covered.
The stake reduction applies to all Bitstamp customers in proportion to their stake.
Failure may result in a reduction of the stake premium or, if the penalty for failure is greater than the premium, a reduction of the amount.
If ETH2 is slashed while trading on Bitstamp, the penalty will be deducted in the next bounty distribution and will affect both seller and buyer proportionally.

Reducing working time with Binance

STAKING ETHEREUM WITH BINANCE

Staking ETH 2.0 with Binance with one click, minimum requirements and maximum profits. Staking cannot be completed in the first phase of ETH 2.0, which can take more than 2 years. Binance tokenizes BETH as the only evidence of betting in ETH with a ratio of 1:1.
It will be possible to trade ETH once the first phase is completed and the ETH 2.0 shards have been installed. In the meantime, you can exchange BETH for ETH at a ratio of 1:1 and receive an amount equal to your current amount of BETH.

Committed ETH will not be redeemable until the shard chains are fully implemented. This means that your ETH will remain committed during Phase 1 until its completion. However, Binance provides users with a BETH token that represents the pledged ETH at a 1:1 ratio, allowing you to continue to use the pledged assets for transactions and withdrawals. You will be able to exchange BETH for ETH when Phase One of ETH 2.0 begins; you will then receive an amount of ETH equal to your current holdings of BETH.

DEFI STACKING WITH BINANCE

DeFi (Decentralised Finance) is a way of providing financial services to consumers through smart contracts. Existing DeFi projects aim to provide higher annual revenues for certain currencies.
Binance DeFi Staking acts on behalf of users to participate in certain DeFi products, receives and distributes the profits earned and helps users to participate in DeFi products at the click of a button.
What are the advantages of DeFi staking?
  • Ease of use: To participate in DeFi Staking there is no need to manage private keys, acquire resources, make transactions or perform other complicated operations. Binance’s comprehensive service allows users to receive generous online rewards without the need for an online wallet.
  • Higher returns: DeFi Staking eliminates the excessive fees associated with standard stock trading. With a constant level of risk, users can achieve the highest possible returns.

The profitability of betting varies greatly.
We list the five DeFi staking options on Binance and their returns at the time of writing (check the current rates on the Binance website):

 
Cryptocurrency Locking period Interest
BTC 120 days 8,19%
ETH 120 days 10,21%
BUSD 120 days 13,33%
USDT no 3,12%
USDC no 2,79%

Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Can I make a passive income with bitcoins?

In principle, it is possible to create passive income with bitcoins.

We are talking about bitcoin mining. However, the difficulties of the bitcoin network are so great that it is no longer convenient for private investors to carry out mining.

Instead, you can generate passive income by mining cryptocurrencies. You just have to decide whether you want to acquire the technical knowledge and do the work yourself, or outsource it to an exchange that will do it for you for a small fee.

Of course, profits vary greatly from one exchange to another. In this case, you should always make sure to buy a suitable and promising cryptocurrency for your bet. It is possible to make high profits from some coins, but a drop in price can eat up all profits!

Summary: How does passive income generation work with staking?

Staking is an alternative to mining.

It requires no special equipment, but an investment in the chosen coin.

Furthermore, this currency must be stored in a suitable wallet to take over network functions as a node. These functions are, for example, the approval of transactions. Nodes that assume the relevant tasks are also rewarded for their work.

Through rewards, participants are motivated to ensure the security and functionality of the entire network. In some cases, coins have to be transferred to the betting pool in addition to the creation of a wallet, as in the case of Tezos.

Therefore, betting is a good way to increase one’s cryptocurrencies.

You are faced with two choices:

  • Become your own validator with little technical training and more responsibility, but with control of your own keys
  • Hire an exchange to do the work for you for a small fee. In this option, you avoid the risk of technical errors, but leave your cryptocurrencies with the exchange instead of storing them directly.

Up to 3 top exchanges

Gianluca Lombardi

Gianluca is the editor-in-chief of this site. A finance graduate, he is an active trader who has tested all trading platforms and knows all their secrets. Technology is his passion; he spends much of his free time in the metaverse. Gianluca loves learning new things, researching, discussing and writing about technology, especially when it comes to cryptocurrency and blockchain technology.