Staking offers cryptocurrency holders a way of putting their digital assets to work and earning passive income on their crypto holdings. So, if you’re buying and holding (HODLing) crypto for the long-term and you aren’t bothered by the day-to-day fluctuations in price, staking is a no brainer.
In This Guide:
What is Staking In Crypto?
Crypto staking can be made out to be this extremely complicated process, but you can think of it as the crypto equivalent of putting money in a high-interest saving account with your bank (back when that was possible). When you deposit funds into your savings account, the bank takes that money and will usually lend it out to other people. In return for locking up that money with the bank, you get paid a little bit of the interest, earned from lending — although now you’d be lucky to earn any more than 2% per year with any major Australian bank.
Crypto staking is just like an interest-bearing savings account, except when you stake your digital assets, you lock up the coins in order to keep a certain blockchain running and maintain its security. In exchange for these services, you earn rewards calculated in annual percentage yields (APY). The returns from staking crypto are generally a lot higher than any interest rate offered by banks.
Staking has grown massively in popularity as a way to make a solid profit on crypto holdings that usually just sit idly in your account. At the time of writing the total value of cryptocurrencies staked exceeded the $280 billion threshold, according to Staking Rewards.
How Much Money Can I Make By Staking?
If we look at the average staking reward rate across the top 260 staked crypto assets on all blockchains, the average comes to an 11% APY — which is far superior to the interest rates from a traditional bank. It is important to remember like all things in cryptocurrency, staking yields can change significantly over time.
If you’re reading this and you’re already about to open a new tab and get to staking your crypto, it’s worth noting that all staking pools are different, and some deduct greater fees from the rewards for their work, which affects overall APY. Always read the fine print before locking up your crypto.
Which Cryptocurrencies Can I Stake?
You can stake a lot of different cryptocurrencies, but Bitcoin and other Proof of Work (PoW) crypto assets won’t be among them. Staking is only possible with cryptocurrencies that have blockchains that use Proof-of-Stake (PoS) consensus.
The most popular cryptocurrencies you can choose to stake include:
How Do I Stake Crypto in Australia?
Thanks to the rapid increase in crypto adoption, staking has never been easier and practically all major cryptocurrency exchanges & platforms now offer staking of some kind.
What Is The Best Crypto Staking Platform In Australia?
These are the following Australian platforms that offer crypto staking along with the average returns that you can expect to see from them.
Coinspot is Australia’s largest crypto exchange and it offers staking for 22 different cryptocurrencies including ETH, ADA, SOL, ATOM, DOT, ALGO, KAVA and other, slightly more niche tokens.
There are zero fees associated with Coinspot’s staking services, and the minimum stake is $1 AUD with no maximum amount. Swyftx provides “flexible staking” which means there is no lock in period and you can withdraw your digital assets at any time. Coinspot also offer automatic re-staking meaning that all rewards will be fed back into that staking account to compound over time.
Swyftx is another major Australian crypto exchange that offers staking for all of the most popular tokens including ETH, ADA, SOL, ATOM, DOT and more.
Much like Coinspot, there are no fees associated with Swyftx’s staking services, and the minimum stake is $1 AUD with no maximum amount. Swyftx provides “flexible staking” which means there is no lock in period and you can withdraw your digital assets at any time, with staking rewards earned minute by minute and compounded daily.
Binance is the world’s largest crypto exchange and it offers a wide array of different staking options. Binance is a good choice if you already have a bit of experience in the world of cryptocurrency, as the amount of staking options can be a little confusing for beginners.
Put simply, Binance offers a very wide range of staking methods, all with different associated risks. Generally speaking, the higher the overall yield, the higher risk of the underlying asset. For those who want to know more, watch the video below to get a grip on everything Binance.
Crypto.com offers users on its “earn” the ability to stake over 40 different cryptocurrencies and stablecoins. With Crypto.com, you can earn up to 14.5% on Polkadot (DOT) or a 14% per annum return on stablecoins including USD Coin (USDC), Tether (USDT).
You’ll likely see a 6% p.a. return on ETH as well as on crypto.com’s native token CRO. The platform also offers a healthy 5% on most others including Litecoin (LTC), Cardano (ADA), Binance Coin (BNB), ChainLink (LINK), even including Dogecoin (DOGE) and Shiba Inu (SHIB).
Advanced Staking Options
If you’re looking for bigger returns than the bigger crypto exchanges like Coinspot and Binance can offer, then you may want to look for a smaller, third-party application to stake your crypto on.
If you are really looking for a way to maximize rewards, the following platforms specialize in providing the highest yields for your digital assets:
Risks of Crypto Staking
As with every type of investing, especially in crypto, there are some risks that you’ll need to think about.
- It goes without saying, but crypto is volatile. Significant drops in price can easily outweigh the rewards you earn, so staking is really for those who plan to hold their asset for the long term regardless of the price swings.
- Some staking requires a lock-up period, which means that you can’t withdraw your assets.
- Sometimes, after choosing to withdraw your tokens, there can be a long waiting period before getting your crypto back.
- It’s rare but staking pools do get hacked, often resulting in a complete loss of all staked funds. If you use a platform like Binance or Crypto.com the assets are covered by insurance. However if you choose to use a decentralized exchange (DEX) the assets are most likely not protected by insurance, meaning there’s no chance of recompensation.
Staking Round Up
Staking your crypto can be a great way to put your idle cryptocurrency holdings to work, especially if you have large amounts of it.
With that being said it’s always important to remember that there’s always some level of risk associated with lending — so you’ll need to assess your own risk preference.
Never stake any cryptocurrency where you’re concerned about major fluctuations in price and always double check fees, and fine print before you commit to anything.