The 2020 summer started with the explosion of new technology in the cryptoverse - DeFi or decentralized finance! No KYC, no financial barrier to enter financial space sparked the next financial revolution. But, it was yield farming and staking that made everything in the space grand. 

As a result, the DeFi market that started on a humble note with $1.5 billion in TVL scaled $105 billion in no time. If you happen to have little or no knowledge of yield farming and staking, you are at the right place. In this blog, we will explain both these concepts and their differences. On top of this, you will also get to know about platforms that support them. 

Yield farming may sound more or less like staking but with an upside. On yield farming, you get more tokens on top of the interest. Hence, suppose if you have lent on ETH/DAI liquidity pool. As a liquidity provider, you get interested whenever someone uses tokens from the pool. Along with that, you also get the LP/governance tokens which you can lock somewhere else to get more returns. In a way, yield farming allows liquidity providers to earn liquidity on liquidity. So, despite the token lock, your liquidity still remains in the form of another token.  The concept of yield farming originated from the Compound protocol. It was the compound protocol that distributed Comp tokens to liquidity providers.

Staking is the process of depositing your crypto to confirm transactions. The more transactions you confirm the higher the reward for confirmation. Staking works on blockchains that use the POS or proof of stake consensus mechanism.

Here's an easy to view table that showcases the difference between Yield Farming and Staking:

Users can lock Uniswap's LP token for liquidity provisioning. In the process, they get exposed to added liquidity on top of the 0.3% fees. There is also added upside given to liquidity providers on Warp Finance. They get WARP tokens which they can lend for extra interest. 

Badger DAO is taking yield farming to the next level for Bitcoin. On Badger DAO, liquidity providers earn rebasing tokens called SETT. With SETT getting pegged to BTC, the price of the token has gone off the roof. Those who got SETT as LP tokens are preparing for the moonshots.

On CoinDCX, you can earn as high as 5% to 20% APY while staking you're crypto. CoinDCX supports EOS, TRX, NEO, QTUM and XTZ.

Binance is one of the best platforms to choose for staking your crypto. You can earn as high as 105.32% APY on some of the selective tokens. For example, when you stake your AXIE. However, for other tokens, you can get within the range of 5% to 13% APY.

The proof-of-stake consensus mechanism was a big leap forward in the field of cryptocurrencies. This makes transactions cheaper and more efficient. Furthermore, staking cryptocurrencies offers investors the opportunity to generate high returns. Let's talk about the best staking coins for the year 2022.

In the financial world, some investors seek high-risk investments because they also come with high returns. They also tend to mix those risky investments with safe ones, in order to minimize their risk. Traditionally, investors used to have saving accounts that yielded them interests. In today’s economies, advanced countries’ interest rates average around 2% per year. You can forget about thinking to invest in risky countries that are either corrupt, poor, or that have been sanctioned.

Enter cryptocurrency staking, which is the exact same thing people do in the “traditional financial world”. Instead of locking money with banks, they lock an amount in a cryptocurrency wallet and earn high yields. In turn, they participate in the operation of a Proof-of-Staking-based blockchain system. Different cryptos have different yields and maturities.

Anything that yields high is risky. When staking cryptos, there are many risk factors that might affect your staking experience:

• Slashing problems: when your validator is being punished by the network for abnormal behaviors (ie. technical problems occur)
• Crypto price depreciation: When you stake, you lock cryptos. Let’s say you froze 100$ worth of X, to yield 10%. Sweet, 10$ profits! Then because of cryptocurrency volatility, the worth of X becomes 10$, yielding in turn 1$…NOT SWEET!
• Lost accounts: Yes, this might occur as many hackers are on the hunt for weak security standards. Recently, an exchange got hacked and you can read about it here.
• Network Centralization: aka the 51% attack, which takes ahold of the whole blockchain.
• Validators “forgetting” to pay rewards: Just like you would follow up on your bank fees, you should follow up on when your interest is paid up, as sometimes technical glitches might happen.

Nevertheless, some exchanges did prove to be worthy of investors’ trust and solid businesses. You should always be on the lookout for companies that listen to their customers, have awesome customer support, and are expanding regularly. Binance is one example of such reputable exchanges, and that’s why we’re going to show you a step-by-step guide on how to stake with them.

Algorand is another modern cryptocurrency and one of the best staking coins. Due to increased adoption and awareness, the ALGO token has increased by over 600% in the last 12 months. For many, Algorand is the next "Ethereum Killer".

Algorand offers annual returns averaging 4.7%. However, staking is still relatively cheap and the upside at Algorand is currently much higher than with the aforementioned staking coins.

Solana (SOL) experienced massive hype in 2021. As a "younger and more modern" version of Ethereum and Cardano, the network made itself popular with numerous investors. Above all, Solana scores with an extremely high transaction speed of up to 50,000 transactions per second. 

The modern proof-of-history consensus mechanism makes these speeds possible. But Solana is also a solid option for staking. The annual rate of return is 6.6 percent. The “lock-in period” is only 5 days. Furthermore, there is no minimum limit for staked tokens, which makes the SOL token one of the best staking coins.

Cardano has long been referred to as the "Ethereum Killer". Improving the Ethereum network was also the declared goal behind the development of Cardano. In contrast to ETH, Cardano has been using proof-of-stake for a long time. This year, the value of the native ADA token increases massively, especially in autumn.

The annual return at Cardano Staking averages 6%. In addition, Cardano scores with the lack of a mandatory “lock-in period”, during which the staked tokens cannot be mobilized.

Binance is the largest crypto exchange in the world. Their own platform Token Binance Coin was a huge success and is now the third-largest cryptocurrency by market capitalization. The Binance ecosystem will benefit from the increased trading activities on the entire crypto market in the future.

The minimum use of tokens for staking is extremely small and the Binance offers very high staking returns. BNB is one of the best options among staking coins, especially for investors who are new to staking. You can get to Binance here.

Ethereum is the second-largest cryptocurrency after Bitcoin and the largest network for decentralized applications. In the future, it has the potential to become the dominant network for staking. Investors have already deposited $ 21 billion worth of coins into the Ethereum 2.0 staking pool. 

ETH still has a few question marks among staking coins. The transition from proof-of-work to proof-of-stake only started in the last few months. Nevertheless, the network offers huge potential for high staking returns through its already existing enormous amount of adoption.