For those looking for cryptos to stake, there are certainly plenty of options to consider. Indeed, staking any token may be unpopular when interest rates are high, and investors can earn risk-free returns in the bond market. With treasury bills yielding well over 5%, why take the extra risk?
That said, staking isn’t as bad as you think. Not everyone has access to the banking sector, and many crypto millionaires prefer to keep their money in crypto and not touch the banking sector.
Additionally, some investors also keep a small amount of cash staked in cryptos just in case something happens to the banking system. I think this is a smart idea, considering that the “mini” banking crisis in early 2023 benefited Bitcoin (BTC-USD) investors considerably. However, there is no guarantee that crypto remains fully insulated from another major banking crisis.
I would also warn that there are no truly “safe gains” in the crypto space. A number of factors determine how safe or stable a given investment is. And even with the most stable networks, there’s always an underlying layer of risk that needs to be factored into the equation.
With that said, here are three cryptos to stake, for those looking to generate passive income in the crypto sector.
USDC (USDC-USD)
I consider USDC (USDC-USD) to be the safest stablecoin right now. This project has had some wobbles in the past after the Terra Luna fiasco all the way back in 2022. However, the stablecoin is backed by a Boston-based company called Circle. This company’s reserves have been regularly attested, and all indications are this crypto is 100% backed by highly liquid cash and cash-equivalent assets.
I believe Circle’s claims, since USDC de-pegged momentarily after the Silicon Valley Bank collapse, but recovered after offices opened and the company was able to infuse enough cash to get it back to its $1 peg.
Tether (USDT-USD) is actually the most popular stablecoin, and it has been so for many years. However, Tether has not been audited and is based in Hong Kong. There have been no full audits of Tether by a reputable firm, so I’d recommend sticking to USDC due to its U.S. presence.
The USDC staking rate depends on the platform, but you can easily get around a 5% yield on most exchanges.
USDD (USDD-USD)
USDD (USDD-USD) is much more risky than USDC and even Tether, but I think it’s one of the best cryptos to stake if you are trying to squeeze out a fat yield. This project currently yields around 20%.
Indeed, this yield is likely unsustainable, and is likely to come down if the network gets bigger over time. USDD is backed by Tron (TRX-USD), a project with a market capitalization of $10.1 billion as of the time of writing. USDD’s market cap is just $730 million.
This stablecoin’s peg system is algorithmic, and its similarities reminds me a lot of Luna. However, the swap mechanism here is controlled, and USDD is 1/14th of Tron’s market cap. This should not allow a death spiral to happen, at least in theory.
Regardless, I would suggest you stake USDC or USDT instead if you want safer gains. USDD should only be considered if you are interested in a high APY and are willing to accept higher risk.
NEOPIN (NPT)
If you’re not looking to stake stablecoins and would like to benefit from a project with many potential growth catalysts, I think NEOPIN (NPT-USD) fits the bill. It is a relatively new project with a $47 million market cap as of writing. This crypto should trade in tandem with the rest of the crypto market going forward.
It’s an AMM-based decentralized finance protocol, which means there’s no need for KYC protocols. I trust decentralized protocols more, as they are less likely to be manipulated. Plus, it is the biggest “real” DeFi user community in South Korea, with $170M in total value locked (TVL), despite being bootstrapped with zero VC investments when it started.
NEOPIN undertakes quarterly and annual audits as a subsidiary of a South Korean public company, and is the only DeFi project chosen to join the Abu Dhabi Global Market’s Digital Lab. Thus, I think it is a relatively safe bet for its size. The protocol has a burn mechanism and provides node revenues, key factors for those looking to invest in projects like this.
NEOPIN’s staking yield is also pretty reasonable and doesn’t scream “too good to be true.” You can stake NPT for a 5.42% APR and they have derivatives offering up to 27%, but again, you should keep in mind that NPT and the cryptos supported here are not dollar-pegged stablecoins, and they move with the market.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
