What is Staking Crypto? Canada's Best Staking Platforms
- Highly secure platform
- Popular tokens available
- High yields
- Easily accessible to beginners
- Not registered with the AMF
- Highly secure platform
- High yields
- Easily accessible for beginners
- Popular tokens often unavailable
- Managed portfolio offer
- Recognized by the CSA
- Ability to invest through model portfolios
- Risk smoothing option
- Fund custody via Ledger Vault
- Highly secure platform
- Easy to access for beginners
- Popular tokens often unavailable
- High yields
Staking crypto is an excellent way to leverage your crypto to generate a passive income.
Crypto staking is less technically complicated that crypto mining, all the while requiring less expertise and no specialist equipment.
The page explores the very best crypto staking platforms, how staking works and how you can get started.
NEXO
NEXO has the most competitive rates among crypto-staking platforms. It has a choice of 39 cryptos to be staked. It boasts among the highest returns in the market (up to 8% on your stablecoins). There are no associated fees and rewards are paid daily. It offers a NEXO Mastercard.
YouHolder
Users of YouHolder profit from the widest variety of cryptos to stake. It has secure wallets backed with $150M insurance by LEDGER vault. Withdrawals can be made at any time. The interface is easy to navigate and simple even for beginners. It has high returns and also offers the options of crypto loans and multi-HODL.
Binance Earn
A popular and secure platform, Binance is reliable and users enjoy high-interest rates, without trading fees. Risks are limited by an internet selection process. You can stake without a portfolio and can withdraw your crypto early which allows users to be flexible.
CEX
This crypto savings account offers a lower-risk alternative to staking. CEX is a regulated platform with a global presence.
Kraken
Kraken is a very intuitive platform for beginners. It offers investors instant rewards, without a need for warm-up or bonding. Users can also stay flexible as the platform allows instant unstaking.
What does staking crypto mean?
Crypto staking is a part of a verification process used by some cryptocurrencies. It allows cryptocurrencies to be verified by proof-of-stake rather than by proof-of-work.
Proof-of-work (used by currencies like Bitcoin) uses the mining process in order to verify transactions. Crypto staking on the other hand allows new transactions to be added to the blockchain without solving mathematical equations.
If you "stake" some of your currency so it can be used in this verification process you will earn money each time a transaction is successfully verified. New coins are minted when a transaction is added to the blockchain. This generates passive income for the owners of the cryptocurrency that is held in the staking pool.
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How does crypto staking work?
Crypto staking can be explained as a form of investment that generates passive income.
To participate you need to hold forms of cryptocurrency that are verified through proof-of staking.
By joining a staking pool you become a validator. Many validators will be assigned to each new block to be verified in the chain. The larger the amount of crypto that you opt to stake, the larger the rewards.
Once you stake your coins you are then opting to become a validator. A crypto staking validator is someone who has staked their crypto and they are then assigned to a new block in the blockchain. There will be many validators that are assigned to a block. Every individual blockchain will pay out crypto to reward validating a block of transactions.
There is no guarantee that you will become a validator if you try staking crypto. However, you are more likely to become a validator when you stake larger amounts of your crypto. When you are chosen to be a validator of transactions, you will be rewarded with more cryptocurrency.
A minimum balance will be needed to create a node. Staking your cryptocurrency on a node is called delegating your stake. This is the proof of stake (PoS) in action. These nodes are helping to form the blocks. The blocks then form the blockchain.
What is proof of stake?
Proof-of-stake (PoS) is a part of the process of crypto staking, whereby new blocks for the blockchain are created and transactions are verified.
The proof of stake happens when the owners of crypto who became validators by staking their crypto will validate blocks that are added to the blockchain.
What are the benefits of staking crypto? What are the risks of staking crypto?
If you are considering getting involved in crypto staking, consider the pros and cons below.
Crypto staking is less technically complicated that crypto mining, requiring less expertise and no specialist equipment
Crypto staking pros
- You can earn a passive income by staking crypto
- Crypto staking doesn’t require a lot of equipment and resources
- Crypto staking doesn't require a large capital investment unlike crypto mining
- Less energy (power usage) is demanded than crypto mining making it better for the environment
- There is a lot of crypto staking competition, so you can balance offers and find one that's a match for you.
Crypto staking cons
- Crypto is a volatile market. If the market shifts dramatically while your crypto is staked your investment may lose value.
- Some cryptos like Cosmos and Tron, have periods of commitment where they require you to keep the currency ‘staked’ meaning that you cannot access your crypto for this time even if the price is falling.
- Running your devices for long periods of time during validation may add costs to your energy bill
Feel ready to start investing?
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Is crypto staking worth it?
Crypto staking can be a very interesting passive investment if you have cryptocurrency that you do not currently want to sell. If you have an amount of coin that you waiting to sell when the market rises, staking can be an easy way of putting that money to work for you rather than simply keeping it in a wallet.
In order to work out if staking would be a good investment for you, consider:
- If the cryptocurrencies you possess are POS-based.
- Are you happy to 'lock' your investment for a period while staking
- If the market took a sudden dip would you be able to wait it out or would you have to sell some of the coins you are intending to stake?
Once you are a validator you can receive newly minted crypto coins as a reward for being that particular block’s validator. The amount you are rewarded with will be based on how the number of crypto coins you stake.
Good to know
Remember, you do not lose ownership of the coins that you stake. You can ‘un-stake’ them if you choose.
In this way, your coins become a ‘working asset.’ Even though you are not actively trading them they continue to make money for you. This is why we call it 'passive income'
The process is really profitable only when large amounts of cryptocurrency have been staked. At the upper end of the scale, you could see returns of up to 20% or even 30%.
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Is crypto staking safe?
Wondering what are the risks of crypto staking?
One of the big risks is if you chose to stake small-cap crypto. This means that you are staking crypto which is a small currency and does not have a lot of trade volume. In this case, it could be more difficult to enter and exit a trade.
As a developing industry, there is always a potential for cybercrime. Although crypto is generally safe and protections are far more complex and thorough than they used to be, there is always some risk.
You will need your computer to be online regularly as a validator because rewards can be missed out on if you are not online when the blockchain needs verification based on your staked crypto.
If there is a power outage, internet connection disturbance or if your computer crashes, this could interrupt the staking and verification process and you may not be included in the node when it is completed. This could result in you losing your rewards for that stake.
Watch out!
As a validator, you should take precautions to protect your wallet and login details. Two-factor authentication is always recommended for these types of data protection.
Can you lose money when staking crypto?
Yes, as with every kind of investment, its value can go up or down. There are no guarantees and you will need to calculate the amount of risk you are willing to take along with how you expect the market to perform. If you miscalculate your returns, then you could make a loss.
Remember that the prices of crypto are very volatile. So your staked crypto coins will be fluctuating in value while they are ‘locked in’.
If you lose your wallet logins or give them away in a phishing scam, then you can lose your coins. This is the worst-case scenario and luckily the most avoidable risk. Security is paramount!
Good to know
For the best crypto security advice see our crypto wallet guide.
How much money can you make staking crypto?
You could make a lot of money or you could lose money. Everything depends on your strategy and the calculations that you make before staking your crypto.
Some people do choose to use an APY calculator for crypto staking. These are useful, but they will not give you personalized information that you may need to make a good decision. They may not indicate accurately the amount that you will make.
The following four points should always be uppermost in your mind when choosing how much to stake and where:
- validator costs
- buy and sell costs on your trading platform
- staking costs
- electricity costs to run a computer while the nodes are formed into blocks
Staking Ethereum, staking Polkadot and staking Cardano can yield as much as 5% to 25%. The smaller, less well-known cryptos have on occassion yielded over 100% at times.
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How is crypto staking taxed in Canada?
In Canada, crypto-staking taxation is determined by Canada’s Income Tax Act. The Canadian Revenue Agency will seek to determine if the stake rewards are classed as income or business income. Business income is sometimes referred to as investment income.
These two different classes have different tax implications.
If you stake crypto frequently in Canada and you get to enjoy these rewards, then the staking will count as income.
Business income rules would apply if you choose to reinvest the coins that you earned as rewards. The defining factor is that you intend to stake crypto and sell the rewards. This would be an investment or business income.
Which crypto is best for staking?
It is difficult to determine the best crypto staking opportunity, as many market factors can influence the price. Each person may have a different goal when they choose to stake crypto.
Here is a list of the popular cryptocurrencies for staking in Canada:
| Cryptocurrency | Value Staked to Date | Total stake % | Reward |
|---|---|---|---|
| Solana | 52.78B USD | 74.95% | 5.99% |
| Ethereum 2.0 | 37.58B USD | 8.86% | 4.54% |
| Terra | 37B USD | 41.75% | 6.08% |
| Cardano | 29.82B USD | 71.9% | 5.01% |
| Avalanche | 25.9B USD | 66.56% | 9.06% |
| Polkadot | 14.26B USD | 52.53% | 14.05% |
The more popular the crypto that you plan to stake is, the easier the process. Popular cryptos are easier to buy and sell and the staking process has a higher volume.
If you are wondering why Bitcoin does not appear on this list it is because you cannot stake Bitcoin. It does not work with a proof of stake system. Bitcoin is mined, meaning a proof of work model is used.
Remember that some of the best crypto-staking coins are the ones that have high trade volumes. This will ensure that you will be able to stake based on crypto that is desired by others. This will then ensure that more coins are minted and you will receive more rewards.
The best staking crypto for 2021 was Ethereum. Remember that the highest staking crypto is not always the one that you should choose. You could consider a few and then make your decision.
What are the best wallets for crypto staking?
According to user ratings and popularity here are some of the most popular crypto-staking wallets in Canada:
- Trust Wallet
- Bitbuy
- Binance
- Coinbase
- Trezor
Some of these are managed by crypto trading platforms in Canada.
What is the best crypto staking platform?
Remember that you will need to weigh up the different costs that they charge against your specific needs. Consider your staking strategy when you shop for crypto trading platforms in Canada.
Some of the costs will be transaction costs to buy and sell your crypto. This is if you are buying and selling crypto to stake more or less. You will find that many of the platforms do not charge a monthly fee.
Some platforms dedicated to staking crypto are:
- NEXO
- YouHolder
- Binance Earn
- CEX
- Kraken
- Crypto.com
What is APY in crypto staking?
APY is the average percentage yield.
The APY helps you to compare the money you will make from staking against the money you might have earned by investing it elsewhere. To do this, APY measures the total amount of rewards that you make staking, over a certain period compounded at certain time intervals.
The compound interest rate formula shows how your money will grow if you leave it invested as crypto and reinvest your profits in crypto. This can help you develop your strategy by comparing the APY with your predicted APR.
You can also use a crypto staking calculator, but it will only take the interest rate into account. There are many other factors to consider when choosing to stake cryptocurrency. The unpredictable actions of other crypto traders can influence price and there are many other market dynamics that a crypto calculator cannot take into account.
What is APR in crypto staking?
APR is Annual Percentage Return. It measures the return you will make by staking your crypto and includes interest rates and other fees that the borrower pays. The APR uses simple interest. You can simulate returns under different conditions using a crypto staking calculator.
The difference between APY and APR explained:
Simply, APY takes into account compound interest and APR looks at simple interest.
Compound interest gives you a better return because returns are then reinvested as part of the principal. Simple interest only calculates interest on the original amount and repeats this annually.
This is best illustrated by an example:
If you chose to invest $100 at a simple interest rate of 5% per year for five years this would give you $125. So your $100 would have earned you $25 over 5 years.
If you chose to invest $100 at a compound interest rate of 5% per year for five years this would give you $127.63.
So when you are looking into investing in crypto, consider your APY and your APR.
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Keep reading about staking crypto:
- How Does Cardano Staking Work? (2024)
- Where to Stake Polkadot in 2024
- What is Ethereum Staking? (2024)
