Being an active cryptocurrency trader is a risky occupation although there are less stressful approaches you can consider.
It is possible to make passive income through staking which means you just need to buy and keep the coins in the long term. While this sounds ideal for many of us, there are some things you should know before deciding whether investing in proof-of-stake coins is for you or not.
How do you earn passive income through Proof-of-Stake?
Perhaps you’re already familiar with Proof-of-Work (PoW), which relies on mining to validate transactions and discover blocks. Proof-of-Stake (PoS) is a simpler alternative and here’s how the basic version works.
Those who own a coin would simply need to hold on to the currency and keep it where it cannot be spent. When a new block needs to be created, the platform will randomly select wallets with staked coins to validate the action. Wallets with the largest amounts of coins will have more chances of getting chosen and receiving the block reward.
Through staking, we are encouraged to invest in a platform, as well as use it frequently and we can receive monthly or yearly rewards based on the sum of our staked assets. However, the earnings can vary a lot between all the different platforms from a fraction of a percentage up to 99%.
How to choose a PoS investment coin
Investing in a PoS coin is a long-term action so you will need to consider several aspects before choosing the one that’s right for you.
A lot of PoS cons have minimum investment requirements, as well as require you to stake through specific wallet apps. Regardless which coin you choose, the safest approach is to start small and invest more money over time. Also, high ROIs might be deceitful so don’t get wooed before studying the coin at a deeper level.
With that said, let’s take a look at what the best Proof-of-Stake coins are right now.
Best Proof-of-Stake coins for passive income
Below we will discuss the best Proof-of-Stake coins available on the cryptocurrency market at the moment. While the returns will vary from one coin to another, all of them have great potential, and safe to say minimum risks.
NEO, also known as “China’s Ethereum” is an economy platform that relies on smart contracts, providing secure trading of digital assets.
If you choose to stake NEO, you will generate GAS, the platform’s own token. Each time someone changes an asset or creates a new one on the blockchain, a GAS fee is charged. GAS is rewarded for each action and split between the NEO stakers accordingly. Obviously, those with more NEO staked will earn more GAS with each payment.
You can stake NEO on several exchanges and most storage wallets. However, the best option is to use the official NEO wallet or keep the coins in cold storage as not all exchanges pay the GAS rewards.
Another positive aspect of staking NEO is your wallet doesn’t have to be connected at all times to earn GAS. On that note, NEO makes a great PoS coin to start with and the annual return is between 4% and 6%. Furthermore, the platform is a robust project backed by intelligent technologies that has a bright future. If you’re interested in NEO and you’d like to learn more, check our dedicated guide.
PIVX is a coin that was initially forked from DASH, but since then, it has shifted from PoW to PoS. This is a privacy coin designed to facilitate quick transactions with extremely low fees.
If you want to stake PIVX, you will need to download the official wallet, sync it with the blockchain, add some currency to it and allow it to stay connected. You can learn all the details in the PIVX staking guide.
The PIVX staking dividends vary between 5% and 10% but you can use the PIVX earnings calculator for a more accurate estimation.
Similar to Ethereum in many ways, LISK is more focused on adoptability and simplicity.
LISK’s Delegated Proof-of-Stake is a bit different than the classic PoS. All the staking rewards go to the top 101 delegates since only they are allowed to forge blocks. Those who stake LSK use them to vote in delegates. Then, the parties share forged rewards with voters and they can vary significantly, between 6.25% and 100% of the earnings.
If you want to stake and vote for delegates via Lisk, your best option is the Lisk Nano wallet. Nevertheless, it’s not the most streamlined process so you will need to study documentation on a dedicated website such as EarnLisk to get started.
Reddcoin is a social cryptocurrency focused on making digital transactions easier for the general public. It was designed to integrate micro-payments into the popular social networks and provide a simple way to instantly tip for content you find useful such as articles and videos.
The 0% transaction fees certainly make Reddcoin an interesting solution and staking RDD is quite easy. Once you download the Reddcoin Core wallet on your desktop, you just need to transfer a few RDD in it, sync it with the blockchain and allow the coins to remain there for 8 hours so the staking can start.
However, it’s worth mentioning that synchronizing with the blockchain can take days and you will need to keep the wallet connected at all times to generate income.
The staking earns are about 5% per year, although you can get a more accurate estimation if you use the Reddcoin Stake Calculator.
Ark is a fast and scalable service using the SmartBridge technology to connect all the other blockchains. You could think of it as an ecosystem rather than a simple cryptocurrency.
Ark relies on Delegated Proof-of-Stake system and the users vote for 51 delegates who generate new blocks. The selected delegates validate transactions, get the rewards and allocate a percentage to those who voted for them.
Ark is an excellent PoS option as it doesn’t require your wallet to be online and connected at all times. To earn your stake you just need to send your votes.
You can even store your Ark on a Ledger Nano S and vote straight from the device. The stake rewards vary depending on the delegate earnings and percentages. You can learn more about Ark’s voting process here.
Decred relies on a hybrid consensus system using both PoS and Pow for validating transactions. This way, there’s no group having a monopoly on the profits and dedicated stakers will always have an influence on how the platform develops.
To stake Decred you need an official wallet that should be connected at all times. You will also need to purchase voting tickets to earn but as an added bonus you will also be able to influence development decisions for the platform.
Users report an average around 2.2% monthly returns or approximately 30% per year. If you’d like to get started with staking Decred, you can find all the information you need in the official documentation.
Linda is a privacy-oriented platform facilitating anonymous and dynamic cryptocurrency payments, equipped with Tor masking and stealth transactions. They also plan to add support for cross-currency trades in the future.
Linda offers 70% annual returns for staking, so it’s safe to say this is definitely an alternative worth exploring. Users also have the option of running a masternode and get 99% ROI with no maximum staking length or minimum investment requirements.
Staking Linda is similar to other PoS coins. You will need the official wallet completely synced with the blockchain and coins that have matured for at least a day. Visit the official Linda staking guide to learn more.
Stratis is a business-oriented platform designed so corporations can use it to develop their own daps without the headache of having to maintain their own blockchain. It allows C# app development and sidechain-hosted transactions which makes it a highly scalable solution.
While it was a PoW project in its infancy, Stratis has switched to the PoS system. If you’re interested in staking Stratis you will need to download the Stratis Staking Wallet Client and keep it connected to the internet at all times in order to earn rewards.
Currently, the staking payout is around 0.5-1% per year so while it may not be ones of the most lucrative options in terms of PoS, it is backed by Microsoft and makes a solid solution for long-term earnings.
Neblio allows the development of distributed apps on a secure and open-source blockchain platform. While anyone can use the network to create and run dapps, it is especially appreciated by enterprise-level clients.
Staking Neblio relies on the age of your coins. The longer your coins have been stored in your wallet, the bigger the rewards. Before contributing to staking, coins must mature for at least 24 hours in your wallet and maximize their reward after 7 days.
Neblio came up with this solution to encourage holders to stay active on the blockchain and not just purchase lots of tokens and store them in a wallet.
Neblio staking has a maximum annual ROI of 10% and you will need to have your wallet online at all times. Nevertheless, there is no minimum NEBL requirement to stake. Check out Neblio’s guide to staking if you’re interested in learning more.
As you can probably imagine, our list of best Proof-of-Stake coins includes only some of the most profitable and reliable options you can invest in.
There are other PoS platforms you can explore and even some popular cryptocurrencies such as Cardano are getting closer to staking.
Ethereum also plans to make the switch to a hybrid PoW/PoS system and while there’s no official date announced yet, the update could roll out before this year’s end.