The easiest way to get started with passive cryptocurrency income is to look at the various options for betting cryptocurrencies on exchanges. Centralized exchanges are capable of removing all the complexities that come with staking crypto assets on decentralized financial protocols, making them the perfect option for anyone still a little new to the wild world of cryptocurrencies.
As a reminder, staking is a key aspect of cryptocurrencies that operate on proof-of-stake (PoS) rather than proof-of-work (PoW).
In PoS, crypto users point to the underlying cryptographic token associated with the blockchain network to mine new tokens rather than using the specialized, energy-intensive hardware used in PoW systems such as Bitcoin. When users bet their crypto holdings as part of the consensus process, they earn a denominated return in the same cryptocurrency they bet on the network. These tokens could be recently generated, collected as transaction fees, or both.
While PoS crypto systems can be a bit difficult to fully understand, many crypto exchanges and financial institutions offer to point coins on behalf of their users. While centralized institutions charge an additional fee for their added convenience, it is worth it in many situations due to the simplification of the entire process. Of course, it should be noted that staking through a centralized custodian eliminates the key principle of decentralization that underlies the entire value proposition of cryptography. Three of the most popular options for staking assistance are Kraken, Coinbase, and Binance.
Kraken
Kraken currently offers twelve different crypto assets for staking on their platform. That said, it should be noted that non-PoS-based assets, such as bitcoin and US dollars, are mixed with PoS coins such as Cosmos and Tezos. Kava is the crypto asset that pays the highest annual Pos reward on Kraken at 20%.
Kraken offers both on-chain and off-chain staking on its platform. The returns earned from the staking of euros, US dollars and bitcoin come from Kraken’s internal programs rather than the picketing of the on-chain protocol.
