The Best Proof of Stake (PoS) Coins
Ethereum’s adoption of the Proof-of-Stake (PoS) model of transaction verification is widely considered a seismic shift in the crypto world.
On the technical side, it’s generally more scalable, with lower transaction fees and better energy efficiency.
On the investing side, PoS coins also allow you to earn “interest” — sometimes called “yield” — through staking.
In our updated guide for 2024, we dig into the best-performing staking coins you can add to your crypto portfolio (i.e, the ones with the highest historical yields).
(Looking for the best crypto staking yields right now? You can find that on our Best Staking Rates page.)
Solana (SOL)
APY: 7.21%
Market Cap: $ 58,784,718,483
Staking ratio: 67%
1-Year ROI: 532.8%
BMJ Score: 4.0
Solana is a PoS blockchain with a heavy focus on scalability. One of the fastest blockchains in the world, this Ethereum competitor also boasts extremely low gas fees.
The Solana ecosystem is also robust, supporting DeFi projects, Web3 apps, NFTs, and more. The SOL token enjoyed a wild ride in 2021, reaching an all-time high of $260 in November.
SOL price sharply corrected in 2022, particularly following the FTX disaster. Its close association with FTX founder Sam Bankman Fried resulted in a near-total loss of value (over 94% by December 2022).
However, Solana’s valuation has soared 532% since December 2022, overtaking even bitcoin as the broader crypto industry recovers. It remains one of the best options for long-term staking, and excellent APY is offered at all major staking platforms.
Pros
- A diverse ecosystem with DeFi, NFTs, and Web3 apps
- Very low transaction fees
- One of the top 10 most valuable blockchain projects
Cons
- Frequent network outages are a major concern
Sui (SUI)
APY: 3.59%
Market Cap: $ 1,859,933,932
Staking ratio: 83%
1-Year ROI: 213.41%
BMJ Score: 4
Launched in August 2022 as a testnet, SUI is a highly scalable Layer-1 blockchain with a focus on building a user-friendly Web3 ecosystem. Since its ICO in April 2023, the blockchain has quickly garnered the market’s attention with its excellent network performance.
Sui uses a delegated PoS consensus mechanism to validate transactions and maintain network security. Within one year of its launch, the token has achieved a market cap of close to $2 billion and an impressive ROI of 213%.
One of the reasons for Sui’s meteoric rise is the team behind the project – Mysten Labs was founded by experts who were originally part of Facebook/Meta’s blockchain initiatives like Project Libra and Diem.
Thanks to its roots in Diem, Sui is linked with the Move programming language. Developed by Facebook, the language allows developers to create highly sophisticated and secure decentralized apps on Sui.
Sui is widely hailed as an upcoming rival to Solana within the blockchain industry. The future looks promising for this young project due to its excellent network performance and rapidly expanding Web3 ecosystem.
Pros
- Innovative Layer-1 blockchain
- Excellent network performance and scalability
- Move programming language for Dapps
- Massive ROI on the token since launch
Cons
- Very young project
- Operating in a crowded market
- Needs more developers and users
Celestia
APY: 14.50%
Market Cap: $ 2,675,754,204
Staking ratio: 53%
1-Year ROI: 56.05%
BMJ Score: 3.50
Celestia is an innovative blockchain network focused on providing developers an infrastructure that can be used to build new blockchains. It claims to be the world’s first ‘data availability blockchain.’
With a launch date of October 2023 for its mainnet, Celestia is a very young blockchain project. In 2022, the team behind Celestia created waves in the market by raising $55 million from backers like Bain Capital and Polychain Capital.
The native token of the network is called TIA. During the mainnet launch, nearly 6% of the token’s total supply (60 million TIA) was airdropped to developers, researchers, and other high activity addresses on Ethereum and its associated rollups.
Within four months of its launch, the token has already achieved a market cap of $2.5 billion. TIA has a hard cap of 1 billion and is primarily designed to pay developer fees for the various data availability solutions.
It can also be used as a staking token, which is why Celestia is on our list of the top staking tokens. Celestia is high on this list despite its recent launch due to the bright prospects of its modular data availability system.
Pros
- Innovative new data availability blockchain
- Token is available at a low price point
- Has immense potential for future growth
- Scalable blockchain aimed at developers
Cons
- Still very new to the market
- Slow network growth
- Needs more projects to build an ecosystem
Cardano (ADA)
APY: 3.06%
Market Cap: $ 27,378,000,000
Staking ratio: 64%
1-Year ROI: 131.5%
BMJ Score: 3.0
Cardano was one of the original PoS tokens in the industry. At a time when Ethereum was struggling with high gas fees and scalability issues, Cardano held the title of “Ethereum killer” alongside other altcoins like Solana.
After major gains in 2021, Cardano was caught up in the bear markets of 2022. While it posted some of the best returns in this group in 2023, Cardano doesn’t seem to have many exciting prospects in the short term.
Although an innovative blockchain with smart contracts and new features, it has struggled to beat Ethereum’s adoption or ecosystem. And now, with Shapella completing Ethereum’s transition to PoS, Cardano’s prospects of overtaking it look slim at best.
After a topsy-turvy 2023, Cardano has posted some impressive gains going into 2024. It is still a vibrant project with a heavy focus on sustainability, a loyal community, and a strong development team.
There are over 1,000 active projects on the blockchain, and it has an all-star team of developers. Overall, waiting and watching seems to be the best policy for Cardano investors. Based on the industry’s current state, ADA is a viable option for long-term staking.
Pros
- Innovative and feature-rich blockchain with constant updates
- Token available at a low price point
- Has the potential to grow
- Huge focus on sustainability
Cons
- Stiff competition from other PoS blockchains
- The chances of overtaking ETH look slim
- Not generating enough hype in the market
Avalanche (AVAX)
APY: 8.51%
Market Cap: $ 16,416,140,596
Staking ratio: 59%
1-Year ROI: 168.4%
BMJ Score: 3.0
Another contender for the title of “Ethereum killer,” Avalanche rose to prominence with the claim of being the fastest blockchain network in the world. It used a native protocol called Snow and sub-networks to achieve high transaction speeds and low latency while retaining scalability.
The AVAX token has largely remained in the top ten list of crypto assets by market capitalization since 2021. The coin is a favored option for staking due to its finite supply, which can potentially increase prices.
Although it fell heavily in 2022, AVAX has managed to bounce back to some extent in 2023. The project has built strategic partnerships with big names like Deloitte, Amazon, Tencent, and other crypto and traditional finance entities.
Spurred by these developments, the user base of daily active addresses witnessed a massive 85% increase in Q1 2023, ahead of big blockchains like Ethereum, bitcoin, and BNB Chain.
The price of AVAX is also bullish, having grown by 483% in Q4 2023. The network is now live on 20 subnets, with an additional 80 more expected to launch within one year.
As of 2024, Avalanche is just outside the top 10 as the 11th largest blockchain in the crypto space regarding TVL. It could still prove to be an excellent long-term investment.
Pros
- Has a finite supply of 720 million tokens
- Popular project with mainstream visibility
- Partnerships with AWS, Tencent, Mastercard, and Deloitte
Cons
- Token price has fluctuated somewhat in 2023
- Was linked to the Terra-Luna project
Ethereum (ETH)
APY: 3.69%
Market Cap: $ 421,707,073,845
Staking ratio: 26%
1-Year ROI: 124.7%
BMJ Score: 3.0
In our view, Ethereum remains the blockchain project with the best long-term prospects. With its rich ecosystem of smart contracts, DeFi apps, and developers, it has the potential to dethrone bitcoin and become the world’s most valuable cryptocurrency.
Ethereum’s transition from a Proof-of-Work token to a Proof-of-Stake model in 2022 attracted the attention of investors who pumped in $18 billion worth of tokens into ETH2 staking after the successful merger.
Further good news followed in April 2023 with the highly anticipated Shanghai-Capella (“Shapella”) upgrade. With this major network upgrade, users can finally withdraw the estimated $34 billion staked ETH for the first time since December 2020. Unlocked staking has the potential to open the floodgates, bringing in more investors and pushing ETH staking into the mainstream.
Despite taking a beating in the bear market in 2022, Ethereum has posted a strong recovery in 2023, buoyed by the success of the Shapella upgrade. By the end of the year, ETH had gained 80% in value, keeping pace with the wider recovery in the crypto markets.
Meanwhile, the requirements for solo staking are quite high – starting at a minimum of 32 ETH. Thankfully, individual investors on a lower budget can look at ETH staking pools such as Lido and Rocket Pool.
Pros
- Future growth potential
- Token/blockchain with high utility
- Staking pools are easily available
Cons
- The token has an unlimited supply
- Solo staking is difficult and expensive
Polkadot
APY: 11.82%
Market Cap: $ 12,917,322,672
Staking ratio: 52%
1-Year ROI: 67.8%
BMJ Score: 2.5
Polkadot is unique among PoS blockchains, with an ultimate aim to connect many different blockchains on a central platform. Unlike other major blockchains, Polkadot does not suffer from the highly divisive “fork” model of upgrades. Instead, the individual blockchains inside the network can upgrade on their own.
With its innovative premise, collaborations with other projects, and strong market capitalization, Polkadot could be a good PoS blockchain for staking. The native DOT token is also the staking and governance token.
In 2023, Polkadot’s price held steady despite frequent market fluctuations. While the overall demand for the token remains lukewarm, the blockchain network has witnessed accelerated development activity, with new parachains and forkless updates.
With the launch of new features like Cross Consensus Message Format (XCM), Polkadot has improved its key value proposition of interoperability among parachains and other consensus-driven systems.
Focused development activity on a blockchain is generally a good sign of its prospects. And the Polkadot team has successfully sustained it despite the crypto bear markets. This is why we consider it an excellent token for long-term staking.
Pros
- Unique blockchain design among its PoS peers
- High market capitalization
- Potential for high staking returns
Cons
- The mission to unite all blockchains seems extremely ambitious; is it realistic?
Tron (TRX)
APY: 4.15%
Market Cap: $ 12,370,425,670
Staking ratio: 51%
1-Year ROI: 109.1%
BMJ Score: 2.5
Tron is a decentralized platform for the hosting and sharing of digital content. Launched in 2017 by the Tron Foundation in Singapore, Tron was designed to eliminate intermediaries and connect content creators with their audience on a blockchain platform.
Although it was often criticized for being a copy of Ethereum, Tron started gaining momentum among crypto traders due to its lower transaction fees and faster network.
The blockchain has a native token, Tronix or TRX, used to pay content creators. TRX suffered a 50% slump in 2022, with the sharpest losses coming immediately after the collapse of FTX.
In 2023, the TRX token displayed solid growth, with a low 109% increase in value year-over-year. The network has also seen a 54% increase in accounts. This token has a long way to go, but given its unique mission and active development team, it is a decent option for long-term staking.
Pros
- Focused on the lucrative digital content/entertainment space
- The Delegated PoS system makes it a highly decentralized blockchain
- Excellent network optimization delivers fast transaction speeds
Cons
- Faces stiff competition in the PoS crypto space
- The founder is a highly controversial figure
Aptos
APY: 7.00%
Market Cap: $ 4,502,132,927
Staking ratio: 82%
1-Year ROI: 8.79%
BMJ Score: 2.5
Like Sui, Aptos is yet another blockchain network born out of Facebook’s failed Diem project. It is a Layer-1 blockchain focusing on high scalability and near-instant transaction times. The blockchain was built using Meta’s Move programming language and went live in October 2022.
The highly modular blockchain can execute parallel transactions and supports sharding, making it yet another network with the capability to become a “Solana-killer.” Since its launch, Aptos Labs has claimed several notable achievements, including partnerships with Google Cloud and Microsoft.
Aptos is a PoS blockchain with Byzantine fault tolerance, like many others. The APT token was launched with an initial supply of 125 million, with 51% allocated to the community, 13.48% for investors, 19% for core contributors, and 16.5% for the Aptos Foundation.
As of 2024, APT has recorded only a modest 1-year ROI of 8.79% in its value. The annual staking APY remains higher than the competition at 7%. However, there are significant doubts about the project’s long-term viability; many see it as a hype project launched by its founders.
Only time will tell if Aptos can carve its own space in the highly competitive blockchain space. Thanks to its accessible price and decent APY, APT remains a reasonably decent staking option.
Binance Coin (BNB)
APY: 2.31%
Market Cap: $ 62,585,888,575
Staking ratio: 14%
1-Year ROI: 44.9%
BMJ Score: 2.0
Binance Coin started as an ERC-20 token issued on Ethereum before the launch of its Binance Chain blockchain (BNB Beacon Chain and Binance Smart Chain). The coin was designed to pay exchange trading fees and other expenses incurred in the Binance exchange.
BNB has since expanded from an exchange token and is now an integral part of the Binance ecosystem. Its first chain, BNB Beacon, uses a consensus mechanism known as Proof-of-Staked Authority (PoSA) for validating transactions. PoSA combines Delegated Proof-of-Stake (DPoS) and Proof-of-Authority (PoA) consensus algorithms.
As Binance is the leading crypto company in the world, we view BNB as a proxy for investing in Binance stock. The token had a particularly rough year in 2022, as the general bear market was compounded by news of investigations by US regulators for alleged violations of SEC rules and other financial regulations.
After dropping to a low of $186 in June 2022, the token posted a significant recovery at the end of the year. By the end of 2023, BNB was trading at $230, still around 65% below its all-time highs.
The blockchain has strong fundamentals. However, it is being held back by the cloud of regulatory risk from multiple agencies in the US, including the DoJ, CFTC, and the SEC. Binance must successfully negotiate its way out of serious sanctions for the token to have a bright future.
Pros
- BNB has a unique burn policy
- One of the best utility tokens
- Low fees and fast transactions
Cons
- Significant ongoing regulatory risk
What is Staking?
Staking is the process by which investors can earn rewards by pledging certain cryptocurrencies for a long time. The crypto assets are selected for staking and locked away, and income is earned similarly to interest on a bank account.
Not all cryptocurrencies earn staking rewards. Only those tokens that use a “Proof-of-Stake” consensus mechanism are suitable for staking, such as those listed above.
Staking is an attractive opportunity for cryptocurrency owners to earn extra income. It is popular for the following reasons:
- Most crypto investors hold assets for a long period, often several years. Staking allows you to put those idle funds to work.
- The annual yield from staking is often much higher than that you would earn from keeping fiat currencies in fixed deposits, bank accounts, and even treasury bonds.
- Staking is quite flexible, with the option to lock away funds for weeks, months, or years.
- Any rewards you earn from staking can be put back into the account/node to earn compound interest.
How Does Staking Work?
Staking is generally a democratic process. Although the finer details can vary widely depending on the blockchain, the basic process is the same – anybody can stake funds if they have the following things:
- The appropriate cryptocurrency. Some blockchains have a minimum qualifying limit to become a validator.
- A specialized computer system to perform validations without any interruptions, ideally 24×7.
- Technical knowledge to set up and optimize the validator node, reduce downtime, and ensure network security.
Most of these requirements are out of reach of the average individual investor. For example, to become a validator on the ETH 2.0 network, you must commit 32 ETH to the blockchain. Then, there are the technical considerations of running a node.
Thankfully, there are other simpler ways to get into staking. Major centralized exchanges usually run staking pools – server nodes that aggregate multiple smaller investors to improve the chances of validating a block and earning crypto rewards. One quick and easy way to get started is through the Coinbase Earn program.
Staking pools have low barriers to entry. You can start by investing just a handful of the relevant tokens. They also come with various lock-in periods, ranging from a few days to several months. You don’t need any specialized technical knowledge to join a staking pool.
When you join a staking pool, you can select the tenure – typically, a longer tenure will promise greater yields. Some pools have a lock-up period – you cannot access or withdraw your coins until the end of this period.
The network will start paying out your staking rewards at a predetermined time. You may get the rewards daily/weekly/monthly/ or quarterly basis, depending on the rules of the blockchain or staking pool.
You can withdraw these staking rewards or add them to the existing ones to increase your future earnings. This is called compound interest, which can play a decisive role in augmenting your income from staking.
What to Look for in PoS Coins
When considering an investment in PoS coins, you must choose your investment carefully. Pay attention to at least the following five factors:
- Market capitalization and trading volume: Well-established blockchain projects like Ethereum, Solana, and Avalanche are less likely to be abandoned down the line when compared to obscure projects with a low market cap and trading volume.
- Minimum staking requirements: Becoming a solo validator is not easy, especially in some of the bigger blockchains like Ethereum. You may be required to stake close to $100,000, depending on the crypto market price. Such a setup is not for everyone.
- The simplicity/intricacy of the setup: Some staking setups require investors to install expensive hardware or have advanced technical knowledge of the network systems. For example, you need at least 256GB RAM and 16 Core systems to run a Solana node.
- Staking Yield: Whether you are interested in running a validator node or joining a staking pool, the expected yield is often decisive. Perhaps the most obvious metric involved in staking, which determines how much you stand to earn on your investment.
- ROI: Yield percentages alone do not tell the whole story. The ROI is a vital metric that tells you the projected dollar value of your staking returns. ROI is usually calculated across a specific period, like one year.
The basic rule of thumb is this: invest in a token because you believe it’s a quality asset for the long term, not just because you get a short-term staking reward.
Why ROI instead of APY?
In the table at the top of this article, you will find cryptos with a wide array of Annual Percentage Yields or APY. However, you should never pick a staking token based solely on the promise of high APY. This is due to the price volatility of the underlying token: your original investment.
If the value of that token stayed the same throughout your staking tenure, you can base your decision on APY alone. However, this rarely happens in the highly volatile world of cryptocurrencies. Prices can increase or decrease drastically within a matter of days.
Here is an example of how it can affect your returns. Consider two tokens, A and B, with the following characteristics:
- Token A costs $10 and has an attractive APY of 30%.
- Token B costs $10 and has a lower APY of 5%.
You buy 100 tokens apiece of Token A and B, spending $1000 on each. At the end of the staking period (one year), you will have 130 A tokens and just 105 B tokens.
But imagine a situation where both tokens have changed in price (which they will):
- If Token A grew modestly in price to $15, you now have $1950, a profit of nearly 100%.
- But if Token B took off in value and now sits at $30, you will have $3150, tripling your original investment.
Your crypto investments are only worth the money you will get when you sell them at an exchange. This is why you must look at ROI, which considers the token price.
If you have the nominal APY of a PoS token and its historical pricing, you can do some ROI calculations on your own. The basic formula is:
ROI = (k * (1 + RR) -1) * 100
Here, k is the price change coefficient, and 1+RR is the nominal yield coefficient.
Here is an example to help explain it further: Ethereum has a nominal yield of around 4.08%, not including compound interest. To calculate the price change coefficient k, let’s look at the price of the token 12 months apart:
- ETH price on August 1, 2021 – $2530
- ETH price on July 31, 2022 – $1695
- k = 1695/2530 = 0.669
If the nominal yield is 4.08%, RR is 0.0408, and 1+RR is 1.0408, then using the full formula, we get:
ROI = (0.669 * 1.0408 – 1) * 100
= (0.696 – 1) * 100 = -0.304 * 100 = -30.4%
Unlock Greater Yield with Restaking
With basic staking, you can only unlock a single stream of passive income. However, there is another option – through a novel concept called restaking, you can stake a token multiple times to earn additional rewards.
Restaking is the process of staking on both Ethereum and another protocol. Your ETH is used to secure both networks simultaneously and earn you rewards similarly.
This is primarily possible through a protocol called EigenLayer. Built on the Ethereum network, it acts as a middleman that provides other Layer-2 blockchains easy access to Ethereum’s validator network.
EigenLayer currently offers you two main ways to restake your ETH:
- If you run a validator node with 32 ETH, you can restake those 32 ETH on EigenLayer directly
- If you have staked ETH on a liquid staking platform like Lido or Rocketpool, you can use the stETH or rETH token you receive on EigenLayer
You can stake these tokens on various protocols or Dapps on EigenLayer and earn additional rewards for your effort.
Since owning a validator node requires at least 32 ETH, the liquid staking route might be the easiest option for most crypto enthusiasts. Here is a quick step-by-step process of restaking ETH through liquid staking protocols like Lido:
- When you stake 0.5 ETH on Lido, you receive 0.5 stETH tokens. (on RocketPool, the liquid tokens are called rETH).
- Next, open the EigenLayer app and connect your crypto wallet.
- Find stETH from the list of tokens and set the amount you want to restake.
- Approve and confirm the transaction to move tokens from your wallet to the EigenLayer platform.
- Your restaked tokens will now start earning rewards on EigenLayer. This is on top of the staking rewards you gain on Lido.
As always, check the protocol details before making any crypto investments. Like any other investment opportunity, restaking comes with several risks. The biggest for restakers is slashing – any software bugs or malicious activity by a staker can result in a 50% penalty (or more) on your staked ETH tokens.
Investor Takeaway
With new and existing blockchains striving to become more efficient and sustainable, Proof-of-Stake coins may be a sound long-term investment. They allow you to earn interest from assets that would otherwise be dormant.
Never invest in a staking token unless you fundamentally believe in the underlying project. Staking yields change frequently, so the long-term potential of the underlying investment should be your primary concern: staking rewards are just the icing on the cake.
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