Here at Token Metrics, we understand that our most valuable asset is you, our audience.
With your help, we have put together a guide to the Top 3 Crypto Staking Projects of 2020, as voted upon by you.
So sit back, relax, and enjoy the Moon Awards.
What is a Staking Project?
To understand what staking is in crypto, you must start at the beginning with Proof-of-Work. When Bitcoin launched in 2019, the consensus system chosen to secure the network was a Proof-of-Work algorithm. A Proof-of-Work algorithm uses computational resources to solve cryptographic problems to secure the network and validate blocks.
A Proof-of-Work algorithm does come with problems though primarily in the form of heavy usage of resources to mine and reach consensus. These issues are where Proof-of-Stake, or staking, comes in as it is a method that avoids the problems that plagued the Proof-of-Work system.
Proof-of-Stake avoids these problems by taking an entirely different approach to reaching consensus. Proof-of-Stake algorithms use an election process that selects the node required to validate each block. The election process can use various factors, including randomization, the number of coins held in the staking wallet, and the staking age of coins.
There are two other significant differences between Proof-of-Work and Proof-of-Stake algorithms. The first variance comes in the creation of cryptocurrencies and rewards for staking participants.
In Proof-of-Work blockchains, miners receive newly created cryptocurrency as a part of the mining process’s rewards. With Proof-of-Stake blockchains, the staking participants receive rewards through transaction fees.
The second difference between Proof-of-Work and staking is that Proof-of-Stake blocks are forged rather than mined.
The users can participate in the forging process of a Proof-of-Stake blockchain by locking a set amount of coins as their stake. The stake’s size determines if an individual node will be selected to validate and forge the next block. Participants with a larger stake have a greater chance of becoming the next validators of a block and receive a reward.
Top 3 Crypto Staking Projects of 2020
1) Tezos (XTZ)
“Tezos is the largest staking project at the moment, with over 80% of token holders staking. This high percentage is thanks to top crypto exchanges like Coinbase, Binance, and Kraken supporting staking on their exchanges.” – Ian Balina, Founder and CEO of Token Metrics
Coming in 1st place with a dominating 40% of the total vote is the staking project Tezos. Developed by ex-Morgan Stanley analyst Arthur Breitman, Tezos launched in 2018 and was one of the largest ICOs of the cryptocurrency boom.
Tezos serves as a multi-purpose platform that supports both dApps and smart contracts. The project aims to combine a self-correcting protocol and on-chain governance to manage network modifications.
The XTZ token powers the Tezos network and is created through the “baking” process. which is the same as the forging process in Proof-of-Stake algorithms. Bakers put up deposits and receive rewards for signing and publishing blocks. Witnesses are then used to validate the blocks, and if a baker is dishonest, they lose their XTZ deposits.
What makes Tezos different from many other crypto projects is that it does not use any other blockchain’s codebase. Tezos was instead created using the OCaml programming language. This programming offers “functional, imperative, and object-oriented styles.”
The Proof-of-Stake consensus used by Tezos is also unique as it implements Liquid Proof of Stake (LPoS), which supports Turing complete smart contracts.
Tezos offers passive income through staking for both their bakers and delegators, each with their own rates. At the time of this article, bakers are rewarded with 6.19%, while delegators earn 5.56%.
2) Cosmos (ATOM)
“A lot of people gave up on Cosmos early in the year only to see it make a raging comeback. People are underestimating what can be built using this platform. This underestimation could give investors an opportunity. We believe ATOM can prove it has the metal to be a major player in its space.”– William Noble, Chief Investment Officer, Token Metrics
Arriving in 2nd place with just over 20% of the total is the staking project Cosmos. Launched in 2017, the Cosmos ICO raised a little more than $17 million. Currently, Cosmos is in the top 25 of the total market cap in the crypto space.
Before Cosmos, blockchains were siloed and unable to communicate with each other. These previous blockchains were hard to build and could handle a small number of transactions per second. Cosmos solves these problems with its new and more technical network.
Built by the team behind Tendermint protocol, Cosmos is the first interoperability blockchain. This blockchain status means that Cosmos is an ecosystem of blockchains that communicate with each other. This communication allows blockchains to transact with each other and developers to break down barriers between the blockchains.
Cosmos’s end goal is to build the Internet of Blockchains, a network of blockchains able to communicate with each other in a decentralized manner. Binance chain is currently the most significant project leveraging cosmos blockchain.
One of the reasons that Cosmos is so popular is that the staking rewards for the token are very generous. At the time of this article, the staking reward for Cosmos is 9.25% but can go as high as 20% if the proportion of ATOM staked falls below two-thirds of the total supply.
With Cosmos, staking is as easy as holding ATOM in a supported wallet and then choosing a validator to delegate to.
3) Icon (ICX)
“In 2017, Icon reached an iconic valuation of over 4 billion in just three months from its token launch. Since then, the team has been heads-down developing their technological framework. Their LFT2 consensus algorithm is second to none in the blockchain ecosystem, as well as their POS mechanism. Only time will tell whether Icon will live up to its expectations.” – Diego Lara, Token Metrics Advisor
Rounding out the group of nominees, in a distant 3rd place, is the staking project Icon. Icon also had a strong showing in our previous Moon Awards category of Best Crypto Projects of 2020, where the project earned an honorable mention.
Icon was launched in 2018 by one of the largest financial technology groups, Dayli Financial. Dayli Financial is a South Korean based company that also owns the crypto exchange Coinone. With Icon, Dayli Financial aspires to create a decentralized network that allows different blockchains to transact through smart contracts.
Icon’s network is powered by the ICX cryptocurrency, which allows for smart contract usage and different blockchains’ interoperability. The algorithm that supports the Icon network is a proprietary Loopchain blockchain engine and is scalable to hundreds of transactions per second.
The network uses a Byzantine Fault Tolerant Delegated Proof-of-Stake (BFT-DPoS) for consensus and an economic governance protocol known as Delegated Proof of Contribution (DPoC).
The staking model of Icon rewards participants with anywhere between 6% and 36% annually as the rate depends on the total amount of ICX staked in the network. At the time of this article, Icon’s staking model currently rewards participants with 11.75% annually.
You can stake any amount of ICX. The only condition is that you must stake the ICX in an Icon wallet. Icon wallets are available for iOS, Android, or as a Chrome extension. Also, staking participants must vote for P-Reps. P-Reps are Icon’s version of validators.
Honorable Mention: Energi (NRG)
“We were researching Energi back in mid-2018. The self-funding treasury model is attractive as it allows Energi to accumulate the resources needed to expand the network. Additionally, in terms of staking, Energi gives powerful incentives.” – Sam Monac, Head of Research, Token Metrics
After missing out on a spot in the top 3 staking projects, Energi earned a spot as an honorable mention by garnering a significant number of votes. Launched in the bear market of 2018, Energi was entirely self-funded by founder Tommy World Power.
Tommy created Energi based on his belief in creating a better, more sustainable cryptocurrency that had the potential for mass adoption. The project has gained more traction recently, and what once was a small project has now grown to have over 60 team members and 225,000 community members.
Energi describes itself as a next-generation Proof-of-Stake cryptocurrency that features decentralized governance, masternodes, and a treasury that funds a team of professionals. The project also claims that they have the most robust treasury system and a significant driver for growth.
The project recently released Energi 3.0, which rebuilt the network to be a smart-contract platform adapted from Ethereum. This release was a massive update to the project as it enables virtually all of Ethereum’s capabilities while incorporating Energi’s treasury, masternodes, and governance systems.
Energi also features a defense team of cybersecurity and investigative professionals that work with law enforcement to protect their userbase from hackers and scammers.
One facet that makes Energi stand out from the rest of the pack is the network’s lucrative staking rewards. At the time of this article, the staking reward is 15.23%, but if you run a masternode, you are rewarded with 47.24%!
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