Binance Coin (BNB) has solidified itself as one of the most relevant and promising cryptocurrencies in the market. With an excellent track record of steady growth and its association with the highly successful Binance exchange, BNB is a popular blue-chip investment among cryptocurrency investors.
If you are a long-term believer in BNB or plan to purchase BNB in the near future, it is worth exploring staking – a lucrative yet simple strategy for maximizing your returns on idle BNB without having to lend or trade cryptocurrency.
By staking BNB, you not only benefit from the coin’s price appreciation but are able to contribute toward the development of the Binance ecosystem – earning additional BNB in the process.
The following discussion will explore the benefits and risks associated with staking BNB and guide you through the process of doing so. Get ready to take your BNB investment to the next level and join the ranks of astute investors who are profiting from staking BNB.
How to Stake BNB TL;DR
Staking BNB on an exchange platform is the easiest way to stake BNB. The best exchange platforms for staking BNB are Binance, KuCoin, Coinbase and many others. The rate of return you earn depends on a wide range of factors, including the platform you choose and the time frame in which you stake, among others.
What is BNB Staking?
Before diving into how BNB staking works, it’s important to understand the basics of BNB and the BNB Smart Chain.
BNB (an acronym for Build and Build) is a native utility token of the Binance ecosystem. It was launched through an initial coin offering (ICO) in January 2017, with a total supply of 200 million tokens. BNB is predominantly used for the following reasons:
- Reduce trading fees: When you hold BNB, you receive a discount for using BNB to pay for trading fees.
- Pay for transactions fees: BNB is used to pay for transaction fees on the BNB Beacon Chain and BNB Smart Chain.
- Pay for goods and services: You can make online and in-store purchases through Binance Card or Binance Pay.
- Participate in token sales: Users can participate on the Binance LaunchPad.
The BNB Smart Chain (BSC) is a blockchain platform that uses a consensus model called Proof of Staked Authority (PoSA) – a hybrid of Proof of Authority (PoA) and Delegated Proof of Stake (DPoS). BSC serves as the underlying infrastructure of the Binance ecosystem.
BSC is powered by a set of 21 community validators that process transactions and maintain network security. All validators are elected by the community and have to meet specific requirements such as a minimum of 10,000 BNB staked.
So how does staking work? It boils down to the dynamics of PoSA – the consensus model of the BNB Smart Chain.
The way PoSA secures the network is by requiring participants to stake (hold and lock up) a certain amount of BNB. In doing so, participants demonstrate that they have a vested interest in the network’s success and are therefore less likely to engage in malicious behavior.
Why Stake BNB?
There are several reasons why investors would consider staking BNB, either as a validator or through a third-party platform. The core reasons are as follows:
- Participation in governance: Staking BNB enables users to participate in the decision-making process of the Binance ecosystem, such as voting on changes to the protocol.
- Reduced trading fees: Holding BNB and using it to pay for trading fees on the Binance exchange can result in a steep discount compared to paying with other cryptocurrencies.
- Network security: Staking BNB plays a fundamental role in securing BSC and contributing to the overall stability of the ecosystem.
- Low barrier to entry: Staking BNB (not as a validator) is relatively easy and does not require extensive technical knowledge, making it accessible to a vast range of investors.
How to Stake BNB?
You can use multiple ways to stake BNB. The method you choose will depend on whether you hold BNB on an exchange platform, hardware wallet or software wallet.
Staking BNB on an Exchange Platform
Staking BNB on an exchange platform is the easiest way to stake BNB. Users have the option of staking BNB on platforms such as Binance, Kraken, Coinbase and many others. The rate of return you earn will depend on a wide range of factors, including the platform you choose and the time frame in which you stake.
Staking crypto on an exchange platform is fairly straightforward. A user follows the following steps before staking their BNB:
- Make an account: This process typically involves know-your-customer (KYC) verification, which can take a couple of minutes.
- Deposit funds: Most exchanges such as Binance or Coinbase support a wide range of deposit methods.
- Trade or Swap: BNB can be traded or swapped through pairs such as BNB/USDT or BNB/BTC.
On Binance, the BNB staking reward usually ranges from 0.35% to 12.99% APY depending on whether you have chosen fixed or variable staking. Conversely, KuCoin allows users to earn up to 8.25% APY by staking BNB.
Staking BNB in a Software Wallet
Software wallets are far more secure than exchange platforms as they eliminate the counterparty risks associated with centralized crypto exchanges. Software wallets can be a great way to stake BNB in a secure manner – offering greater convenience than a hardware wallet. There are multiple options for staking BNB with a software wallet, including Trust Wallet – Binance’s official software wallet, which has historically offered a high APY on BNB staking. There are other great wallets that support BNB too like Exodus Wallet and MetaMask.
Staking Crypto + Earning Rewards
Staking BNB in a Hardware Wallet
Your BNB tokens can also be staked via hardware wallets. Generally speaking, hardware wallets are the safest form of storage as they store the keys of your crypto offline – providing an extra layer of security from cyberattacks. Ledger is the top hardware wallet brand for decades and for good reason. It offers 2 main hardware wallet devices with a 3rd coming soon. Both the Ledger Nano S Plus and Nano X supports BNB, though you will need to install the BNB app onto your wallet. You can also use the MetaMask integration with a Ledger wallet to use essentially all EVM chains (like Polygon, BSC, Avalanche, and many more) with an unmatched combination of ease and security. Ledger wallets support more than 1,800 cryptos including Bitcoin, Ethereum, Dogecoin, Ripple and all ERC-20 tokens.
Possible Risks of Staking BNB
Despite its potential benefits, there are risks to consider before staking BNB. Like any investment, understanding these risks will help you make more informed decisions. Here are a few key risks associated with staking BNB:
- Malicious attacks: Wallet attacks and scams are common in the crypto sector. Before users stake BNB themselves or with a third party, it is important to complete due diligence.
- Price volatility: The value of BNB, alongside all other cryptocurrencies, is still highly speculative. Token values can fluctuate greatly and are subject to high market risk.
Where to Buy BNB
The best place to buy BNB is on Binance.US or Binance (for non-U.S. users); however, you can also buy BNB on other exchanges such as KuCoin. Investors can purchase BNB using credit cards, through swapping features or through a variety of trading pairs such as BNB/BUSD or BNB/BTC.
So, Should You Stake BNB?
Staking is an excellent way to earn passive income on idle BNB while helping secure the network, although not without risk. If you choose to participate in staking, using Trust Wallet is a great choice. You can earn 30%+ APY in BNB staking returns, and Trust Wallet doesn’t take a cut.