Best Crypto Staking Strategy for 2023!!

this is the complete crypto staking guide for this year in this video we're going to go over the top staking coins the rewards that they pay and also some of the underlying aspects of staking to really help us out with our strategy and decide if we actually want to go into a coin or if it's not going to be a good idea so all of the time stamps for the different sections are listed down in the description one of the best resources out there for staking cryptos is staking rewards.com it's just going to give us a list of all the top cryptocurrencies that actually pay some staking rewards now the main thing we can look at when comparing any crypto and the yield that it pays is the adjusted reward that's right here the reward isn't really that important because of something called inflation and that's the main thing we need to look at when we are choosing a cryptocurrency so what we can see is that ethereum pays an adjusted reward that is the same as the reward which is four percent so ethereum isn't creating new tokens just to pay out as they Awards as we come down we can see a few cryptocurrencies that actually are doing this cardano is one of them for the moment there's still some inflation in cardano that will end fairly soon but as you can see the adjusted reward is basically flat because those staking rewards are coming from the creation of new coins through inflation instead of actually just fees getting paid on that Network now BNB chain you can see the adjusted reward is positive Solana still has inflation so it's important to understand if we are getting rewards from the creation of new coins or from actually fees paid on the blockchain before we choose the coin with the highest rewards then we can actually look at which coins are paying rewards through inflation versus paying them through real profits or fees that are charged so as an example right here we've got Ada which is paying rewards of around three percent and it's paying those through the creation of new coins for the most part so if it creates three percent new coins in a year let's say and it gives you them and then it also gives everyone else those new coins if it's created three percent new coins and the project is worth 10 billion it's still worth 10 billion there are just three percent more coins and so that value is split up over more coins and so all else being equal you're not actually getting more value so if you had a thousand dollars in a piggy bank and two people owned one share each each of those shares is 500 if you have the same piggy bank and you just create more coins you're not creating more value you're just making the value of each of those coins less this is now 250 each instead of 500 each but you have the same actual value for the project and so what we can take away from inflation is that if you are a long-term investor you definitely should be staking because otherwise you're actually losing out this three percent and so if you're a long-term investor um and you you're going to hold the coins anyway then you're actually three percent worse off if you don't stake than the other people but you're not gay gaining anything all else being equal now what we also have to keep in mind for cryptocurrencies is the total Supply inflation itself isn't great it's definitely a weight on the price if people get those coins and sell them but if in the end there is a limit on the supply that actually takes away some of the downside of inflation initially this goes for Bitcoin as well which does have inflation and will have a fixed supplier so as you can see cardano here does have a fixed Supply the inflation started off fast and then moved over we can also see this for apecoin as well so eight coin is not really a currency it's not a blockchain but it's more of an application or a token built on a blockchain and as you can see here it pays great staking rewards but the inflation rate is insanely high as well now with a token let's say a fiat currency that has no cap a high inflation rate for the rest of times really bad a high inflation rate for apecoin over the next few years potentially isn't great because you have all of this new token Supply coming onto the market and potentially some of those people are just going to be selling out maybe for other coins or even going back into Fiat from these kind of rewards that they're getting right and so that's not great over the short term so even though you're getting this reward if you're staking this token and it's very high that's being paid out by the creation of new coins which isn't great the main thing though if you are a long-term investor is as long as there is a cap eventually on the supply and some way to pass fees back to you as an investor then that is something we can look out for yes we have to deal with inflation in the short term however if there is a cap on Supply that inflation in the short term can be managed and for the most part if you are a long-term investor and you are holding the coin then you definitely want to be staking just so you don't fall behind other people that are actually holding and staking getting those inflationary rewards when we are looking for staking coins then the overall tokenomics are the most important thing not just the yield that you're getting right now I have a massive section on this in the crypto course tokenomics it goes through step by step much more simplified understanding what toeconomics are and how they work over the long term there's also a section on defy right here as well which goes through you know staking and using wallets applications to stake as well so if you're interested getting a bit more Pro check the crypto course Link in the description how can we find coins that are paying rewards through fees rather than through inflation we can do a bit of detective work so if we're choosing coins we can firstly look how much inflation they have left and if it's a problem for us so the first thing to do is go to adjusted reward on staking rewards this is going to tell you if the staking yield that you're getting is real yield or if it's being paid through the creation of new coins if the adjusted reward is lower than the reward that is telling you that inflation is there paying some of those yields out you can see Avalanche is paying quite a lot of rewards through the creation of new coins that's not necessarily bad let's also have a look at the circulation of these coins as well so what is the circulation of these coins now and how much have they got left so as we can see here we can go on something like uh coin Gecko and we can just go and see so I'm going to click on let's say BNB right here and you can see the circulating Supply is this much and the total Supply is this much so what we can see here is that that there are no coins from BNB that can be created out of thin air anymore essentially the total Supply is in existence and so any uh yields that we're getting from staking is real yield from fees on BMB chain we can go over and check this you can see that the adjusted reward is actually higher than the reward right here I think this one's a little bit off but I can tell you through you know research that BNB has no inflation and so any staking rewards you're getting from BNB are going to be real yield now that means that this coin has some sort of fundamental value and yield and you can use it to compare to other coins in terms of the yield that they're paying and you can actually invest in these coins through yield differentials and which ones paying you the best yield risk reward and everything like that so we can very easily do this for all the coins BNB 100 of Supply so no inflation left it's generally a good thing ethereum also is a hundred percent Supply it's a little bit different for eth because they use fees to actually burn tokens to either keep the supply flat or reduce it it may also increase as well dependent on your network usage and so I've put 100 here but it could change by you know half a percent a year or something like that either to the downside which is very good for investors or to the upside which isn't as great now you can see Cosmos actually has Unlimited Supply right now not great so if you're getting an you know a staking reward of five ten percent well that's the creation of new coins so it it isn't great now the price can still go up it's not like it always goes down but it's definitely um not as investable as something that has a hundred percent of the tokens out and it's giving real yield that's just better for investors you can see Ada has almost 80 percent of its Supply in existence now Matic 90 and Avalanche 43 as an example right here you know with so much token inflation left and token Supply left that's coming onto the market you can see that Avalanche has fared slightly worse than its competitors during this bear Market which I'm making this video Avalanche here at number 20. it was way higher and it's just come down a lot now there may be other reasons for this but one of them may be the fact that there's just a lot more Supply coming onto the market through staking which can you know exacerbate downward moves and make it harder for the coin to recover because you just have to have more buying pressure to force the price up versus this which has no token inflation potentially eking out onto the market so circulation is really important it's not terrible if you're a long-term investor like here and you know that um there's going to be a cap on Supply and you think that apecoin is gonna do well and it's gonna have demand then inflation isn't necessarily terrible if you're a long-time investor but it definitely will have a negative effect compared to coins that have the vast majority of their inflation done and they're paying more a more real yield over time when investors want to stake then they'll do so through two Avenues one is through centralized exchanges and one is through decentralized wallets and decentralized providers so let's go through some of the pros and cons of both of these centralized exchanges like binance and Kraken they offer staking services and they may also offer earned Services as well which are different so I'll go through the differences of those now for the most part a reputable exchange you should have nothing to worry about but we've seen all of the lending and staking products that have blown up over the last bear market like Celsius and FTX was just a fraud and so when you are putting your coins on a centralized exchange you are giving up custody of them and that is a risk of course so we have to just go in with our eyes open make sure that we are choosing reputable exchanges now for the most part binance and Kraken are right up there as you know the most reputable in uh in the world let's go through the binance um earn platform and some of the differences here I'll leave a link to them in the description they do give a deposit bonus and a trading bonus if you're new so check that out by the link down below but on something like an earn product on an exchange you may see two different options one is staking and one is savings now savings or simple earn as binance call it is where you actually lend your coins to Traders on their system now on binance and other exchanges Traders will trade on Leverage or margin and they'll have to borrow coins if they want to go short they pay an interest for that and so what binance is doing is just sitting in the middle and saying if you lend your coins out to this Trader he'll pay you an interest rate in the meantime and then when you want your coins back you can get them back this is something that happens throughout Finance in the stock market as well when you can lend your stocks to someone and everything like that so that's it and if it's managed properly it shouldn't have too much tail risk but there is of course always risk if you're lending coins out now for the most part it's all managed however that is lending money out which is different to staking staking is where you put the coin on the blockchain and then receive the block rewards and so it's very very different in terms of the risks you should read the tnc's and be very familiar and just um you know go in with your eyes open if you want to use a savings product versus a staking here as you can see staking product binance will just do all of the background stuff for you they'll stake the coins you don't have to use a wallet Etc so if you want to stake ethereum you can do that right here you can buy eth in your spot wallet stake it right here and that's it and they'll give you that coin back I've got other video guides on staking ethereum on binance as well because there's a few steps and a few things to know so I'll link that in the description if you need some extra help there the other option we have is to take custody of our coins and then State them directly so the way you do that is by putting them into a wallet where you can stake them each and every chain will have its own dedicated wallet so if you want to stake Avalanche just look for Avalanche wallet cardano has yoroy and so on you can search for those wallets I've also got video guides on all of the top coins on how to stake them specifically step by step so I following all of those in the description most people will use a metamask wallet which is a hot wallet or a truss wallet something like this or for the most security you will get a ledger and then put the crypto on The Ledger and you can actually link The Ledger up to metamask and stake a lot of coins like that you can also link ledger up to a provider like Lido who kind of sit in the middle here I'll go through how that works so decentralized wallets do have some extra steps so we can look at that right now which is on chain staking so one chain staking is where you buy a coin you go to the official wallet and you stake it right on the blockchain and you get paid that reward in your wallet and that's it from the blockchain this is the least risky thing I think you can do because you're storing the layer one coin on the blockchain and just getting those rewards so there's no leverage there's no counterparties involved there's no centralization you just have to make sure that you can keep your wallet keys safe and keep your recovery phrase safe a very quick example of how to do that come to a native wallet like yo Roy here you can actually link a ledger device up with yo Roy which is great so keep your coins as safe as possible link it right up to the wallet come to the staking tab it will be called staking or delegating right here and then you can just choose a stake pool or a node or a validator delegate to them and there you go you have your coins coming back to you this is layer one of staking the basic thing you can do it's the lowest yield safest it's solid you know nothing's gonna happen there's no one in the middle so this is safe and solid and you just get the basic blockchain blockchain rewards if you want to see how to State kadano Soul BNB or all the others uh links to those videos in the description one of the major drawbacks of staking on most blockchains is that you have to lock up your coins when you stake not a big deal if you're a long-term investor but you lock them up and you can't do anything with them if you want to sell them you have to unlock them and there's a bonding period which could be anywhere from 9 to 21 days depending on the coin which isn't great right if you want to sell the coins then you have to wait nine days to sell them it's not great and so what's happened with evm chains which is ethereum virtual machine is that there's providers that provide something called liquid staking and this is what most blockchains use right now cardano doesn't use it because it doesn't need to it's very different you delegate to a wallet and you can actually really use the coins in your wallet through defy you don't have to use a staking provider or anything but most chains you do and so this is how liquid staking works instead of going to the blockchain wallet and staking yourself and bonding the coins for a certain period of time you just take your value in the coin that you want to invest and you stake it through one of these providers now these guys are centralized entities they're you know their applications and they're written by humans but they're smart contracts right and so they write these smart contracts to you give them the coin they actually stake it for you but they also give you something in return which is a staking derivative a liquid staking derivative Otherwise Known an LSD liquid staking derivative so you get this coin that is accruing staking rewards but also is liquid which means that you can sell it straight away if you want to now for this they take a fee let's say they take 10 of the fee they also often run validators as well so they'll actually run validators in the network they'll help secure they'll do all of that kind of infrastructure stuff they take a small fee for it and you get the staking rewards minus their small fee this is very popular now because it gives people options and also lets you use those coins in defy to increase yield if you want to this is Lido right here by far the most popular and the biggest you can see they do ethereum staking they pay 4.8 percent Solana 7.2 polygon 6.3 now all of these have a lock up especially ethereum as of making this video but they are going through with the Shanghai upgrade but I won't talk about that um the the lock up right here on these coins is like 9 to 20 days something like that and so it's an issue if you stake with Lido though they give you this staking derivative in your wallet it accrues the yield for you but you can use it across D5 this is stator as well who do many coins um so we'll go to stake now and see what we have here if you want to stake BNB coin they pay three percent right here you can connect a wallet like metamask you can get your BNB in there and invest it they'll give you this coin this bnbx coin that a cruise staking rewards but you can sell it on exchanges as fast as you want this is all decentralized this is not centralized and so you can't use these coins on most centralized exchanges so this is liquid staking with you know your own wallet but this is a way to actually remove the lockup and the bonding period plus use your coins in D5 to try and get higher yield from them this is how Traders earn extra yield on their staking coins and it is very complex but I'll try and explain it and stick with me here so every time that you use a more complex strategy or you use more applications or more Network providers you're increasing risk every time and the potential for something to go wrong and so I'll highlight the risks um you know throughout this as well I don't want to put my name to any of these providers or any of these strategies it's just what Traders are doing so the way you increase yield is by taking the staking coin that you have and putting it into some sort of strategy either a lending strategy where you lend it out on a market to then earn you know lending fees or you put it into a decentralized Exchange where you earn trading fees from other Traders you put it into a liquidity pool I've got videos specifically on all of this liquidity pools exchanges and everything I'll leave those in the description as well but what people will do is use a liquid staking derivative plus the L1 coin together in a liquidity pool and they earn trading fees from Traders so as an example right here on eth you have eth and staked eth which is the staking derivative stake teeth pays the staking rewards but you're also getting fees from um you know this liquidity pool now what's great about this is that these two coins have they should have the same value more or less and So you you're still keeping your Expo exposure to the coin that you want to gain exposure to so that's obviously very good now what you do is you go and find a protocol that is in exchange like curve Finance or pancake swap whichever blockchain it's on and in the in the protocol in the exchange you'll get those trading fees from Traders so people will swap the coins and you'll get the trading fees plus you'll be keeping the staking derivative so you're keeping those staking rewards as well the exchange May pay you some incentive tokens as well in their own token so what you can do after you get enough fees and incentive tokens is then sell them back into these coins which is the ones that you want price exposure to and that just goes around in a circle where you're getting fees and rewards selling them back into the staking derivative and the lp you know the lp coin which is this one um and then just you know increasing your yield over time now that's incredible incredibly um difficult but there are these things called aggregators which we'll have a look at which do it all for you so you basically just invest the coin that you want and something like beefy probably one of the most popular yield aggregators there's also yearn Finance as well they all choose the protocol they'll choose the blockchain they'll they'll get all of the fees and the rewards they'll sell all those fees and rewards and they'll put it back into the Strat into the coin that you actually want to invest so they do all of that for you in a smart contract so I'll show you that now so firstly we get the staking derivative so in this occasion we have BNB coin three percent as a staking yield then you go on to something like beefy which is a yield aggregator you choose the chain you can see that the bnbx which is the staking derivative plus BNB which is the L1 coin this is a liquidity pool it's paying 23 right here with a boost APR so incentives and everything like that it's you know putting everything in the strategy along with many other investors because this is a smart contract that's doing this automatically so many people put their coins in do this get the fees and rewards pass it back to BNB and so what you're doing is getting 20 yield on the coin that you want price exposure to you can also do it with a 3 ethereum so we'll look at the ethereum chain we're going to go to staked eth and you should be able to sit here wrap steak teeth and eat as you can see and steak teeth paying three percent and seven percent so this one isn't actually good because it's paying less than normal steak tea so you wouldn't do it this one maybe so let's go over the risks right here well firstly every time that you're using a staking provider you're increasing risk if you're staking on the blockchain this is like the least risky then you're using a middleman or an infrastructure provider that's a risk smart contract risk rug pull risk Insider risk right that is definitely a risk and it has happened for some other providers so definitely is something that can happen and then when you're using an aggregator or an exchange you've got smart contract risk you've got rug risk you know hacks and everything like that these do happen and so these are risks that you have to be aware of that definitely can happen so when chasing yield even though it seems like it might be quite High the risks may not be worth it the tail risks may not be worth it just to get a little bit of extra yield everyone can make their own decision as to how much they want to invest in these strategies or not how about earning passive income with Bitcoin then well we can't do that with Bitcoin because it's a proof of work crypto you can't stake it it doesn't pay staking rewards so there's really two ways to earn um extra yield out of Bitcoin price exposure I'll go over them now and some of the risks of them so you can make a decision whether that's right for you so the first one is through lending and then the second one is what we just saw which is providing liquidity on exchanges so firstly we cannot use Bitcoin in defy it doesn't work so what happens is you get these tokens that aim to have the same price as BTC so this one right here is called wrapped Bitcoin wbtc what happens is there's a centralized custodian called bitco they buy one Bitcoin Bitcoin they put it in their wallet and then they create the wrapped Bitcoin on the ethereum blockchain in a one for one ratio so everyone knows that if they have wrapped Bitcoin they can go to bitgo and redeem it for one BTC on the Bitcoin blockchain and so it keeps its value so you you retain price exposure to bitcoin but you're not holding Bitcoin you're holding a wrapped coin by a centralized custodian so there could be risk there in terms of the custodian centralization risk Etc so that's more risk on top for sure rather than just holding BTC then what they would do is go and put it on a lending protocol like compound or are they and you just get passed back yield I'll show you this very quickly you can see on the arbitrary Market on Ave wrapped Bitcoin down here is yielding 0.48 so the reason for that is it's fairly low risk in terms of most borrowing on Ave is over collateralized meaning if someone wants to borrow a thousand dollars they need twelve hundred dollars of assets on there to borrow and so you can see because it's fairly low risk um in terms of lending anyway all else being equal the yield is very low that's just is what it is but of course you've got centralization risk here for the wrapped Bitcoin then you're using protocols and other blockchains again so um you know it all just piles up bit by bit now the other way is to provide liquidity as you can see here the downside of this is that yes you need wrapped Bitcoin but you also need another version of wrapped Bitcoin in some ways so if we can see here what we can look at is the different versions of BTC that are on different blockchains so you have sbtc here um and you have wrapped Bitcoin which we've seen if we go down we have these two sbtc there's btcb which is the the binance version of raps Bitcoin so you have all of these different versions of coins that have their different centralization risks and potential to have something go wrong with them now if you're happy holding them you can see that you can provide liquidity and make 4.65 here five percent here um which is obviously a great yield if you're holding Bitcoin except you're you're not really holding Bitcoin there are specific risks for each type of Bitcoin derivative and so definitely be sure about those before doing that and then of course you have all these risks of the exchanges and the blockchains as well so yield higher yield equals more risk but it is a way to actually invest in BTC and earn some yields some Traders do do this if you are getting a massive yield for something it's probably because it's way risky so there are many different risks these are the four major risks Asset Risk itself if you're buying a coin to stake the price can go down if it goes down 50 and the staking yield is five percent you still lost loads of money you also have protocol risks if you're doing any of this D5 stuff there have been hacks and you know lots of other things these do occur so these are a risk you then have blockchain risks you know if you're staking a coin directly on ethereum it shouldn't be that risky right it's kind of the least risky method but if you're holding a derivative Bitcoin instrument on a smaller blockchain um out on some you know random D5 app then the risk probably is quite high of hacking or something going wrong and then there's just outright fraud and rug risk Rich which none of us can really plan for but it's something that we can plan for by just staking directly on a blockchain and then you shouldn't be rugged off or defrauded in any way all of the other videos and resources I mentioned in this video linked down in the description crypto course link down there as well if you want to get way more Pro we have private Discord groups that talk about all of this stuff every day so check about if you're interested I'm James with money zg cheers for watching and I'll see in the next one

Channel: MoneyZG

Views: 22,323

Keywords: crypto staking passive income, crypto staking explained, crypto staking tutorial, crypto staking strategy

Id: F8zht_HXYB4

Length: 27min 15sec (1635 seconds)

Published: Tue Jan 10 2023