Cryptocurrencies may be revolutionary, amazing, and secure, but there is a fact that remains: people only buy cryptocurrencies because they will potentially get a return. Regardless of what anybody may have you believe, that’s the main point of cryptocurrency, at least to investors.
There are several ways to earn from cryptocurrencies, and over time, people have only come up with more. If you are reading this article, it is probably because you heard something about staking and you want to know how much you can make staking your coins.
In this article, I will explain what it means to stake a cryptocurrency and how you can earn from it. Then, you’ll learn how crypto staking is calculated and the best crypto staking calculator you can use to determine how much you can potentially make from staking your coins.
Table of Contents
- What Is Crypto Staking and How Does It Work?
- How Is Crypto Staking Calculated?
- What Coin Is Best for Staking?
- Best Crypto Staking Calculator for 2022
What Is Crypto Staking and How Does It Work?
To help you understand crypto staking in detail, it’s important to dive briefly into the inner workings of some of the most popular cryptocurrencies.
If you are a crypto enthusiast, you probably already know that cryptocurrencies are built over a system known as the blockchain. The only way to get cryptocurrencies, other than buying them, is by contributing to the blockchain and getting the coins as a reward. But how do you contribute to the blockchain?
For security, every blockchain needs a chain; which is a collection of individual computer nodes that verify each transaction to ensure it computes. When you contribute to the blockchain’s security, you get the associated cryptocurrency as a reward.
However, that creates a need for the blockchain to identify who is contributing to distributing the rewards fairly, and that is the purpose of proof-of-work and proof-of-stake. Early cryptocurrencies like Bitcoin used the proof of work system, which consumes more energy and is generally less efficient and disliked.
To correct the wrongs of Bitcoin, Ethereum came as an alternative with a whole new system to prove the contribution of individual computer nodes to a blockchain known as proof-of-stake. Proof-of-stake works by rewarding you based on how much of the cryptocurrency you own, similar to a savings account.
The process of earning cryptocurrencies by contributing a blockchain that uses the proof-of-stake system is known as staking. While my explanation seems a bit too long, all the terminologies and explanations are important for a holistic understanding of the concept.
With the explanation given above, it is already clear that you cannot stake all currencies. If it does not use a blockchain that runs on the proof-of-stake system, staking does not work at all. That rule automatically disqualifies Bitcoin from the list of cryptocurrencies you can stake for a profit.
Some of the most popular cryptocurrencies you can stake in 2022 include Ethereum, Cardano, Polkadot, Tezos, etc.
How Is Crypto Staking Calculated?
When I first heard about the proof-of-stake system and the overall idea of staking, the first question that came to my mind was: “but how do we calculate our earnings though?” Seriously, who doesn’t like money?
Like almost everything about cryptocurrency, calculating your potential earnings from staking your coins is pretty complicated. Different cryptocurrencies use different implementations of the proof-of-stake system, setting different rules that make it impossible to give you a hard formula.
However, you should always note that staking is designed to reward those that hold on to their cryptocurrency over the long term. The longer you are willing to stake your coin, the more you’ll potentially make.
Many crucial factors may affect your earnings when you stake your coins, thereby increasing or decreasing your reward rate. The most important factor is arguably the amount for staking; most coins set a minimum amount you must meet to be able to stake your coin.
Another factor that can affect the returns you get from staking your crypto is the period. You can not expect similar returns when you stake your coins for a few hours, as opposed to the entire calendar year. One has to be the better investment, isn’t it?
The number of nodes is another important factor to consider. For the uninitiated, nodes refer to the individual computers partaking in the blockchain, which in this case, is the staking. In short, the more people trying to stake their coins, the lesser an individual user gets. Ethereum staking gets you next to nothing.
Since it is hard to account for these factors for every coin, it’s hard to give specific figures. However, you can make use of a crypto staking calculator to get an idea of how much you should expect to make by staking X amount of crypto for a specific length of time.
There are several staking calculators on the internet that can take care of that perfectly. Later in this article, I will show you the best crypto staking calculator to use in 2022, but first, let’s take a look at the best coins for staking.
What Coin Is Best for Staking?
If you are also looking to earn a bit from staking like me, you should start on the right foot. You already know you can get an estimate of how much you will potentially make from staking. The next step is choosing the most profitable coins and locking them up for profits.
However, I wished cryptocurrency staking were that easy. Before staking, there are many things you need to analyze apart from the staking benefits to check if it is a profitable target.
One important metric to track is the monetary value of the cryptocurrency, especially in the long run. If a coin suddenly falls by 95% while yours are still being staked, you will be losing a ton of money even if you are earning twice or thrice the amount you staked.
To prevent you from making silly staking mistakes, I have collected some of the best coins for staking that have consistently done well over the past couple of years.
1. Cardano (ADA)
Cardano is a proof-of-stake blockchain platform that’s specifically designed for smart contracts. The platform introduced ADA as its native cryptocurrency, a token that runs on the proof-of-stake system. Unsurprisingly, Cardano has grown to be relatively popular.
There are two methods of staking ADA; you can be a passive stake delegate or run a stake pool proactively. Running a stake pool will require more dedication, but it also pays in tons, compared to what you get from stake delegation. There is also a crypto staking calculator on their website to help determine the average amount of ADA you’ll earn after staking.
2. Polkadot (DOT)
Polkadot is another proof-of-stake blockchain that has gained popularity recently, and mostly for good reason. While it’s a bit confusing to wrap your head around at first, you can quickly come to realize that you can potentially make a fortune staking DOT.
You can earn either as a validator or a nominator; while validators need powerful hardware and a minimum of 350 DOT for a start, there is no such requirement for being a nominator. However, there can not be more than 22,500 nominators on the blockchain at once, creating an implied minimum requirement of around 120 DOT.
You can check out the official documentation to learn more about Polkadot’s reward system, but all I understand is that it pays well. If you have the requirements to be a validator, it is something to consider if you consider cryptocurrency a day job.
3. Solana (SOL)
Solana is a smart contracts platform for the deployment of dApps. It uses the SOL as its official cryptocurrency, a token that runs on the same proof-of-chain blockchain and is also useful for the payment of network fees.
Solana also has delegates and validators, and they work a bit differently. Validators must have powerful hardware and consistent uptime to keep the validation node running, while the delegators only stake their tokens for profits over the long run.
The average annual percentage yield for staking Solana is currently 6.41%. In short, you get 64.1 SOL every year for every 1,000 SOL that you stake as a delegate. You may want to check out the official whitepaper for more information on how the Solana blockchain works, especially about the unique proof-of-history.
Best Crypto Staking Calculator for 2022
Before staking your holdings in any cryptocurrency, you want to know how much you start to gain in the long run. While you can source the formulas and calculate the crypto staking rewards yourself, you don’t want to waste your time doing that. There are many crypto staking calculators you can use to calculate the potential interest on your stake.
Typically, the official website for the token you are staking should have a calculator that you can use to calculate your profits if you stake the coin. Since I can not confirm that all cryptocurrencies have that, here are some of the best crypto staking calculators on the internet.
Staking Rewards is one reliable crypto staking calculator that lets you calculate the return on investment for staking your coins over a specific period. It lets you calculate the staking rewards for popular tokens like Ethereum 2.0, Binance USD, Tezos, and Solana, as well as for less popular ones.
The crypto staking calculator has a very intuitive interface that makes it extremely easy to use. Simply enter how much of the tokens (or its equivalent in dollars) you intend to stake and it will calculate how much you will make in the specified period instantly.
While Cryptolek’s interface is easier to understand than that of Staking Rewards, it offers a lot less information, making it unsuitable if you want to make an informed decision. Like Staking Rewards, it features many cryptocurrencies, but with a focus on the most popular ones.
When you get to the staking page on the website, you get a lot of cryptocurrencies and tokens to choose from. Scroll down to the one that matters to you and click on the “Calculate” button beneath it to continue. From there, you can enter the amount you intend to stake as well as the term to calculate how much profit you’ll get.
When looking for a platform that lets you calculate how much you can make from staking your coins, only a few come close to Guarda. One big disadvantage of the platform, however, is the limited number of coins available within the calculator.
On the plus side, it offers more data than Cryptolek, but just below Staking Rewards. It also offers you a platform where you can stake your coins to make money on the few tokens that it supports.
If you’re looking for fresh ideas on how to get a decent return on investment for your crypto asset, why not consider staking it for the next 365 days for decent returns. You can stake your coins for a shorter period, but who doesn’t want more returns on their investment?
If you’re wondering exactly how much you can make by staking your crypto, I have got you covered. This article contains the best crypto staking calculator, as well as alternatives that you can also use. Alternatively, simply go with the calculator on the official website of the blockchain, if they have one.