The Best Places to Stake Tezos (XTZ) For Passive Income
The ability to stake cryptocurrencies and earn a specific interest rate for doing so has inevitably pitted these new forms of currencies as a direct rival to fiat currency and the traditional financial system.
The reasons are not far-fetched.
Beyond holding money that is not directly controlled by the state but pure math, there is also the chance that the value of these cryptocurrencies will go up in the future, and leave investors a lot richer.
One of the mechanisms that allow cryptocurrency investors to earn interest on their holdings is staking. In this article, we will dive deeper into staking Tezos (XTZ), one of the top ten cryptocurrencies by market cap.
First, though, let’s understand what staking is.
What is Staking?
Staking is the process of holding funds in a cryptocurrency wallet, delegating these coins to support the operations of the blockchain network, and then earning rewards for doing so
Blockchain networks, like Tezos, support staking because they operate with a Proof-of-Staking (PoS) consensus mechanism, whereby transactions are confirmed by validators instead of miners such as on the Bitcoin network.
Therefore, Tezos (XTZ) token holders who hold at least 1 XTZ can select which validator (baker) they want to delegate their tokens while the validator, in turn, can control the network on their behalf and earn rewards for itself and the supporters.
Aside from Tezos, other blockchain networks that support staking include Cosmos (ATOM), VeChain (VET), TomoChain (TOMO), Algorand (ALGO), Tron (TRX).
Why Stake Tezos (XTZ)
The most logical question to ask at this point is why a cryptocurrency investor may want to consider staking Tezos. Here are some reasons:
6-7% Annual Yield
Interest rates on bank deposits are falling into the negative zone in some countries and continuing to decline in still many. Therefore, a six percent annual yield seems like a steal despite the rollercoaster nature of the cryptocurrency market.
PoS Leader
Aside from being one of the largest cryptocurrencies by market cap, the Tezos network arguably represents the most successful implementation of the proof-of-stake (PoS) protocol, remaining fully operational since 2018.With older networks such as Ethereum also preparing for a switch to PoS, Tezos seems well-placed to continue leading the market for staking coins.
Staking and Custody Infrastructure
Being one of the oldest staking coins means that literally every popular staking crypto wallet and exchange provider enables native support for Tezos (XTZ) staking, albeit with slightly different formats.Additionally, institutional investors looking to stake XTZ can enjoy high-grade custody solutions from crypto companies like Coinbase, and more recently Switzerland-based Bitcoin Suisse.
The Best Places to Stake Tezos (XTZ)
So, as an investor who is interested in staking Tezos (XTZ), it’s only logical for you to consider which wallet would be best for you to stake your assets. Here are the best places according to our rankings which notably places funds security ahead of yield:
Hardware Wallets
Hardware wallets are arguably the safest ways to store cryptocurrency. With the rise of staking coins, popular hardware wallets such as Ledger and Trezor now allow XTZ holders to delegate their coins without sending them out of the wallet.In simpler terms, you can enjoy cold-storage security and XTZ rewards, claiming the total average 6% annual yield, minus a validator’s fees
Note: With Ledger, it takes at least five weeks to receive your first XTZ rewards, although you can expect rewards every three days after the first payout.
Non-Custodial Wallets
Similar to hardware wallets, non-custodial wallets that support XTZ staking can be another perfect place to earn passive income off your XTZ holdings. You remain in control of your funds via a recovery phrase and a regular password.
Some of the most recommended non-custodial wallets include:
Trust Wallet
Platform: Mobile Annual Yield: 7%
Atomic Wallet
Platform: Mobile and Desktop Annual Yield: 5.75%
Exodus Wallet
Platform: Mobile and Desktop Annual Yield: 5-6%
Exchanges
We placed exchanges third on the list because, as the famous crypto sayings go, “not your keys, not your crypto.”However, for investors who are comfortable with having a third-party manage their funds, exchanges that offer Tezos (XTZ) staking services can serve as an option.
In recent times too, many leading crypto exchanges have added support for Tezos staking. For security, we’ve chosen some of the most popular exchanges where you can securely stake your assets.Note that most of them do not require that you do anything technical to start earning rewards. Instead, you only have to deposit your XTZ on a crypto wallet on their platform to start receiving passive income.
Binance
Location: Global Annual Yield: 6-7%
Kraken
Location: United States Annual Yield: 6%
Binance US
Location: United States Annual Yield: 6-7%
Coinbase
Location: United States Annual Yield: 5%
BitFinex
Location: Global Annual Yield: 5%
Final Words
In this article, we’ve explained what staking is, why you may want to consider staking Tezos (XTZ), and the best places to do. As global adoption of blockchain-based products grows, one can expect that earning staking rewards will become the norm, perhaps almost in the same way as earning interest on bank deposits.
Written By W. Michael, CNIR
