Want to jump straight to the answer? You can stake ALGO on Coinbase.
Staking cryptocurrency is a great way to earn rewards while contributing to the success and security of a blockchain protocol and ensuring long-term earnings, reducing transaction fees for token holders and portfolio diversity.
Cryptocurrencies use blockchains, which are public ledgers that verify transactions and data. To ensure that blockchains run smoothly, many projects allow users to stake their cryptocurrency assets in a way that validates network transactions. These proof-of-stake networks process transactions in a more energy efficient way than proof-of-work networks, which rely on mining to verify blocks by solving complex mathematical equations. In exchange for contributing these staked assets, the validators are rewarded with more of the digital asset they stake.
What is Algorand?
Algorand is a proof-of-stake blockchain that is designed to provide high-speed transactions while keeping energy costs low. Algorand allows for smart contracts, which are immutable agreements on the network. These smart contracts can be strung together to create decentralized applications, which run on the blockchain similarly to how software runs on a computer. Algorand also allows for creating non-fungible tokens (NFTs) that are stored on the blockchain with a unique identifier to prove ownership.
Algorand issues its native currency, ALGO, to everyone who holds a certain amount of ALGO in their wallets. This occurs because Algorand is a pure proof-of-stake blockchain. Additionally, because Algorand uses a PoS consensus algorithm, the network is very unlikely to fork.
Algorand differs from other cryptocurrency projects in that it was created by a distinguished academic: Massachusetts Institute of Technology (MIT) professor Silvio Micali. Micali is a distinguished computer scientist who won the Turing Award in 2012, and his involvement lends credibility to the project.
Algorand also has a foundation that is rewarded with ALGO for its efforts to advance the technology. Due to the large and well-credentialed team behind the project, ALGO has become a popular choice among cryptocurrency investors.
How Does Staking Work?
Any user that holds more than 1 ALGO in their wallet is eligible to receive rewards. Exchanges sometimes allow rewards to be earned on a balance of less than 1 ALGO. The rewards currently produce an annual yield of around 5%. The rewards are claimed every time a transaction occurs from a wallet. These staking rewards are a great source of passive income.
How to Stake Algorand
Staking ALGO on an exchange is simple. Most major exchanges offer staking rewards on your ALGO balance, you just need to enroll in this service.
Coinbase simply requires that investors enable staking rewards in settings and accept the terms of service for these services. Coinbase takes a commission of your staking rewards, in exchange for them holding your cryptocurrency on the network. This commission is small and shouldn’t be much of a hindrance for investors already using Coinbase for its convenient interface.
Binance also allows the easy staking of ALGO and takes a smaller cut of the rewards than Coinbase does. However, Binance is known for its poor customer service and offers limited features to its U.S. customers.
Crypto.com offers soft-staking on a user’s ALGO balance but it offers a low APY compared to other exchanges.
Kraken is a major exchange that notably does not allow users to earn staking rewards on its ALGO balance. ALGO can also be staked without using an exchange, just by possessing ALGO in a wallet. So, if you use Kraken, you can transfer your ALGO to a cryptocurrency wallet to earn rewards. These hardware or software wallets will receive rewards whenever they complete a transaction. Hardware wallets like Ledger are the most secure way to store cryptocurrency.
Where to Buy Algorand
You can find ALGO either with or without staking rewards, on almost all major exchanges.
Coinbase offers easy integration with PayPal, and has a highly regarded mobile application. Coinbase has a short setup time, which attracts new investors. Most notably, Coinbase offers FDIC insurance on the USD balance of its users — all USD on the exchange is insured similarly to a bank balance.
eToro allows for the trading of the most popular cryptocurrencies and allows investors to mimic the trades of other notable investors with well-established return rates.
Crypto.com offers a VISA card with cashback rewards and a low fee structure.
- No or Low Fees
Earn Interest on Other Cryptocurrency with BlockFi
BlockFi allows users to earn interest on cryptocurrencies, even those that aren’t proof-of-stake. Interest rates experience significant variation depending on what asset is staked and the amount of the asset being staked. For example, BlockFi offers 4% APY for Bitcoin deposits less than 0.25 BTC, and between 0.25-5 BTC, it decreases to 1.5%.
BlockFi also has a loan service where users can provide their collateral in the form of cryptocurrency assets. This feature allows users to access liquidity in USD or stablecoins without selling cryptocurrency assets, which means that no taxable event has occurred.
ALGO can be staked on a hardware wallet offline. The staking rewards will be added to the wallet the next time a transaction occurs from that address. In short, the wallet will get rewards the next time it is online again.
Current staking rewards on the network result in an approximately 5% APY.
Is Staking Algorand Worth It?
Staking ALGO could represent a hugely profitable venture as it continues to increase in price. If you hold a large amount of ALGO, accumulate more ALGO by staking your balance, and ALGO continues to increase in price, you’ll enjoy a large passive income. Staking combined with a price runup would likely beat investing in a cryptocurrency that doesn’t offer staking rewards. Plus, the extreme simplicity of staking ALGO makes it appealing to new cryptocurrency investors.
Frequently Asked Questions
Is Algorand safe?
Algorand is safe if your tokens are stored in a secure wallet. Additionally, you must protect your portfolio by monitoring the markets and hoping to enter and exit at the right time.
Can you make money from Algorand?
You can make money from Algorand by staking or hodling, but you must remain patient and allow the crypto market to grow organically.
About Noah Goldstein
Noah Goldstein is an Undergraduate Student at the University of Michigan. Noah is a writer that covers cryptocurrency news for Benzinga. Originally from New Jersey, Noah now resides in Michigan. Noah is an active cryptocurrency investor with positions in Ethereum, DeFi projects, and NFT Ticketing Solutions. Noah believes that blockchain technology will change the world.