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Staking On Binance

Binance holds the largest trade volume for any exchange on the cryptocurrency market. Due to its ambitions for growth, the exchange is now accompanied by its native dual blockchain network.

Binance Chain (BC) was launched in 2019 and was developed for the decentralised high-volume exchange of cryptocurrency assets. This Smart Chain (BSC), which launched in 2020, runs in parallel with BC but allows for smart contract functionality and integration with the Ethereum network

Binance Coin, or BNB, which started as an ERC-20 (Ethereum-based) utility token for the exchange in 2017, migrated to the BC network and now powers the native blockchains. The increased usage of the exchange and increased development on the native blockchain networks is why BNB is currently one of the most valuable coins on the market.

The BNB token is used to pay trading and transaction fees, earn rewards through Binance Earn and stake in the BSC network.

Outside of the Binance ecosystem, holders can earn interest on BNB through centralised lending services, utilise yield farming opportunities and even use it for real-world purchases, such as booking flights on Travala.

This guide will explore the various ways you can use BNB tokens to earn rewards.

What is Binance Coin (BNB) staking?

Staking is the process of locking up cryptocurrency tokens to help secure and run a blockchain network.

Funds that are deposited are used to help operate and secure the network, ensuring efficient transactions and economic viability. Users that stake cryptocurrencies typically accrue additional tokens to incentivise locking their assets. The BNB token can be staked on the Binance Smart Chain blockchain in return for rewards.

The BSC blockchain uses a proof-of-staked-authority (PoSA) consensus mechanism. Unlike Bitcoin, which uses a proof-of-work model to validate transactions, the BSC is updated and operated by 21 validators. The validators process transactions in the chain by locking up (staking) BNB tokens. However, the validators must also be elected every 24 hours by delegators. Delegators are all other members that have staked BNB tokens.

When it comes to staking BNB, there are two ways to earn rewards: as a validator or as a delegator.

Validators on the BSC network power the blockchain through processing transactions. Validators then receive BNB tokens as a reward. While this sounds appealing, becoming a validator is difficult as it requires both capital and technical expertise. It is often best performed by users with larger BNB holdings and advanced technological expertise.

A validator on the BNB network needs to do the following:

  • Operate a full BSC node
  • Stake a minimum of 10,000 BNB
  • Be elected every 24 hours through being a top 21 candidate in terms of voting power.

As you can see, BNB staking as a validator is a pretty daunting task. Luckily, for the passive cryptocurrency investor looking to stake BNB tokens, becoming a delegator is an easier option.

Delegators offer validators their BNB tokens via a supported wallet or crypto exchange. By offering BNB tokens, they help their chosen validator become elected as one of the top 21 candidates. Once a validator enters the top 21, they can start contributing to the operation of the BSC. Staking rewards are then distributed to validators and then proportionally redistributed among delegators, depending on the number of tokens invested in the validator.

How to stake Binance Coin

Staking on an exchange

Staking on an exchange makes the process very simple. The exchange will operate as the validator and will complete all of the technical work for you. This means you don’t have to worry about researching and selecting a suitable validator. The Binance exchange charges no staking fees, which is a bonus.

Staking Binance Coin on the Binance exchange is very straightforward:

  1. Binance. Head over to the Binance homepage and create a Binance account.
  2. Deposit. Deposit BNB tokens into the Binance wallet or purchase BNB tokens via fiat or crypto exchange.
  3. Binance Earn. Navigate to the Binance Earn page. This can be accessed via the dropdown menu: Finance > Binance Earn.How to stake Binance step 3
  4. Search BNB. Search for BNB in the coin search box (though it will likely be at the very top of the list).How to stake Binance step 4
  5. Product selection. Look for the “Staking” product in the available list and click “Stake” at the end of the row.
  6. Locking period. Choose your locking period (30, 60 or 90 days) and the amount you would like to stake. The minimum is 0.0001 BNB and the maximum is 50,000 BNB.How to stake Binance step 6
  7. Confirm. Once you have accepted the staking agreement, you will then need to confirm your transaction. That’s it! You will now start passively earning Binance Coin rewards. At the time of writing, the estimated annual percentage yield (APY) for BNB is 7.72%, but this changes on a daily basis.

Staked BNB can be withdrawn or traded at any time by clicking “Redeem earlier” after navigating to your staked orders. This can be accessed via Wallet > Earn.

Staking through a cryptocurrency wallet

Staking BNB through a cryptocurrency wallet is a relatively easy process and  supported by a number of platforms, including Trust Wallet or Binance Chain Wallet.

Though a little more complex and expensive than staking through an exchange, it offers more flexibility to the user in terms of security and validator selection.

The minimum number of BNB tokens that can be staked varies from wallet to wallet, but it is usually at least 1. Withdrawing BNB from a wallet will take 7 days.

How to stake BNB with Trust Wallet:

  1. Download Trust Wallet. Download the most recent version of Trust Wallet from the Google Play Store or the iOS App Store.
  2. Create an account. Install Trust Wallet and create an account.
  3. Seed phrase backup. Back up your wallet and securely store the randomised 12-word recovery phrase.
  4. Create an exchange account. Set up an account on a cryptocurrency exchange like Binance or Coinbase to purchase BNB.
  5. Send BNB to your wallet. Purchase the desired amount of BNB and send it to your Trust Wallet address. You must have at least 1 BNB to begin staking.
  6. Staking menu. Access the BNB staking menu by clicking on the coin and then clicking “More…”.
  7. Stake. Press Stake and type in the number of tokens you wish to lock and the duration of this period.
  8. Choose validator. Select a validator from a list provided. You can access staking data for BNB on the Binance website.
  9. Confirm. Submit the transaction and begin to passively earn staking rewards!

You can unstake at any time by going into Binance Coin’s menu in the digital wallet and selecting “unstake”.