Where To Stake ICP
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TABLE OF CONTENTS
Can You Stake Internet Computer (ICP)?
Internet computer is based around the Proof-of-Stake mechanism and therefore, ICP can be staked to earn rewards. To do this, participants can either stake the tokens on the Network Nervous System App or choose to deposit their tokens onto a cryptocurrency staking platform. Normally, it's easier to stake on an exchange than otherwise. The rewards vary depending on the lock-in period, and naturally, the longer they choose to stake the higher the rewards.
Best Places To Stake Internet Computer
Binance introduced ICP staking in April 2022, with 4 locking periods of 30, 60, 90, and 120 days respectively. There is also a flexible option that allows participants to choose the number of days to stake ICP. A minimum of 0.1 ICP is required to stake on Binance.
The 30-day option provides investors with an APR of 4.95%, which is below average when compared to other coins. However, investors may find the 120 days product quite lucrative as it offers returns of 21.90% APY at the time of writing. These are some of the highest returns offered compared to the best cryptocurrency staking coins in the market.
The flexible option enables users to choose the locking period according to their convenience, but the returns there are quite negligible with a 0.50% APY return. Although, this allows individuals to move ICP across to the Binance exchange which is one of the few places for buying, trading and selling ICP tokens. Moreover, it is a safe and secure exchange to leave ICP tokens with industry-leading security measures.
Overall, when it comes to staking ICP on a crypto exchange, Binance is our top pick due to its numerous staking terms available and peace of mind the tokens will be safe. Learn more about Binance in our extended review on Binance.
The most basic staking product for ICP on Bitrue offers a 4.2% expected annual rate of interest, and there is no lock-in period for this staking option. Investors can stake their crypto with a minimum of 10 ICP tokens, while the limit for staking stands at 100,000 tokens. This product is a good alternative to Binance in terms of its flexible product type because the interest offered here is over 8 times that of Binance. Therefore, investors who wish to stake their crypto without a locking period will receive much better returns with Bitrue.
Bitrue has 3 other ICP staking products that have a lock-in period of 14, 30 and 90 days, and offer an APY of 13.66%, 9.11% and 45.55% APY respectively. These returns are significantly better than that of Binance, yet the exchange isn’t the first preference by investors because it has much lesser liquidity than Binance. For context, the exchange is not present in the list of top 50 crypto exchanges by volume, while Binance stands at number one.
While that is true, investors can still go forward with the platform if high returns are the priority. Along with ICP, the platform has several other staking options, some offering APYs of over 200%. To learn more, read our full review on Bitrue.
3. Network Nervous System App
The Network Nervous System is a software used to govern Internet Computer and it does this by providing a place where participants can make community-based decisions for Internet Computer. The NNS also acts as a blockchain with a public key to validate all the transactions. The NNS proposes a vote, such as whether to add subnets to the network and these proposals are voted upon by holders of the ICP token and they receive rewards in the form of ICP tokens.
The annualized staking returns are time-based and start from 11.1% APY for a 6-month holding period. The next staking bonus is 11.7% APY for a 1-year period all the way to 20.8% for staking over an 8-year period. These rates are estimates and subject to change with market volatility and the number of ICP tokens in the network governance.
While the process to stake on the NNS app is pretty direct, it may not be the most convenient, given the fact that users have to purchase ICP tokens on an exchange like Binance and then transfer them back to the app to stake the tokens. This is a major disadvantage of staking with the Network Nervous System app compared to the options above. It is much simpler for individuals to stake ICP directly on a unified exchange where the tokens were bought or traded from.
What Is Internet Computer?
ICP introduces itself as a revolutionary crypto project that has an idea to create a new kind of decentralized internet and a global computing system and serve as an alternative to the traditional cloud services owned by major corporations. The project was founded in 2016 and was introduced as DFINITY and currently has a market cap of over $1.4 Billion.
With independent data centers around the world, ICP plans to have a protocol that runs on millions of computers around the world. “Instead of running on a dedicated server in Google Cloud, for example, the software would have no fixed physical address, moving between servers owned by independent data centers. One primary benefit of such an arrangement is that this new internet will be open-source, and will therefore avoid any conflict of interest that is commonplace among traditional cloud service providers.
ICP is the native token of the Internet Computer and is used for governance on the network. Where users who’ve locked in some of their ICP tokens get a chance to vote in the future development of ICP and are rewarded for the same. The token is also used to pay for any transactions on the network. Ideally, any applications that run on the traditional internet will be able to run on Internet Computer which could be social media or e-commerce applications we know of today.
Ways to Stake Internet Computer
1. Staking ICP on the Network Nervous System App
The NNS constantly puts up proposals to vote on the app, and these proposals are voted upon by ICP holders who’ve staked their crypto & gain rewards for doing so.
Here is a step-by-step process explaining how to stake ICP on NNS:
- Buy ICP tokens. The first step is to obtain ICP on an exchange that supports the token. At the time of writing, the top crypto exchanges with the highest ICP trading volume are Binance and Coinbase. These exchanges have fiat onramps, or the tokens can be converted with another altcoin.
- Create an account with the app. In order to participate in the governance of the ICP token, you will have to create an account on the official app that enables ICP staking. An Internet identity is required to log in to the NNS app. This can be done using the biometrics available on a mobile device such as fingerprint or face ID. Or by using a physical key to authenticate the device. There is also a third option, where users can connect their wallets to authenticate themselves.
- Transfer ICP tokens to the app. Transfer the ICP tokens from the exchange to the “Main” wallet address displayed on the app. This should be done in less than a few minutes.
- Begin staking. Once the ICP tokens have arrived in the Main wallet, stake it by clicking on New Transaction. The minimum ICP required for this transaction is 1 ICP. The user will also need to choose the staking option such as Dissolve Delay. This is a period of time before the tokens can be released. and can range from 6 months to 8 years. The rewards increase with the longer duration. Lastly, choose which neurons to follow for voting.
2. Staking ICP on an Exchange
There are a few staking exchanges that support ICP staking. Our best pick is Binance exchange, however, there are other options such as Bitrue that can be used.
To stake ICP on a crypto exchange, follow these steps:
- Choose a staking platform. Select a staking platform from our recommended list above. Open an account and log in with the registered credentials.
- Purchase ICP. Add funds to the wallet in either fiat or crypto. If depositing traditional money, there will be a Know-Your-Customer (KYC) process to complete first. Next, buy ICP tokens using the funds in the wallet. Existing ICP holders can transfer the pre-owned ICP tokens to the exchange.
- Navigate to the staking section. Go to the staking section of the exchange and navigate through the staking list. Select ICP from the options.
- Choose a staking term and enter the amount. Decide on a staking term from the list such as flexible or fixed staking. Enter the number of ICP coins to stake which should be more than the minimum staking amount.
- Review and start staking. Confirm the request by clicking on the “Stake Now” button.
How Does Staking Internet Computer Work?
Staking, as a mechanism, was introduced in cryptocurrencies that follow proof-of-stake consensus mechanism that selects random validators to confirm the transactions on the network. While the ICP network isn’t entirely based on proof-of-stake, it is powered by a four-layered consensus mechanism that is based around PoS, and therefore enables crypto staking.
A “neuron reward” is calculated every day, and neurons who’ve participated in votes have received a claim relative to their proportional stake. That is the number of ICP tokens earned. This means participants keep the network functional and are rewarded with ICP tokens for their contribution to the governance and security of the network.
How Much Can You Earn Staking Internet Computer?
The average ICP staking reward using an exchange is between 4.5%-11% APY in a fixed or locked term. There are longer terms available such as 120 days for a 21.90% and 45.55% APY return on Binance and Bitrue respectively. Although, there are several factors besides the lock-in period that can affect the reward. These include the dissolve delay, amount staked, age of the neuron (relating to the NNS), number of voting proposals and neurons participating in each vote, and the average age of all neurons. To work out the estimated rewards for staking ICP, the ICP Neuron calculator can be used as shown below.
Is Internet Computer A Good Coin To Stake?
When we strictly consider stalking specifications, Internet Computer is a fair coin to stake due to the following reasons. First, the coin has a remarkable APR, relatively much more than most other crypto tokens that are available to stake. Second, the staking limit, unlike other coins such as Ethereum, is quite minimal. Therefore, increasing the number of eligible participants. The token also has an APY that is more than the gas fees, which means they will definitely receive returns upon staking the coins. Which otherwise can be balanced out by enormous gas fees.
The project by itself has a lot of potential with a current market cap of more than $1.4 billion and ranked #39 according to Coinmarketcap. However, the token price has slumped in recent years. The initial listing price on exchanges such as Binance and Coinbase was USD 500 and is currently trading in the low USD 5 range. Therefore, while ICP staking returns are attractive, the rewards will not offset significant capital losses during a bear market.
Pros And Cons Of Staking Internet Computer
Here are a few pros and cons you should be informed about before choosing to stake ICP.
Staking Internet Computer Pros:
- High potential for growth. The Internet Computer project is quite visionary and shows a lot of potential for future growth
- The ICP token offers impressive APYs, and is therefore an optimal choice of coin to stake for investors
- What enforces the credibility of a project more than the number of people who support it. ICP was 5 years in the making, and was launched only a year before, but has gained a lot of popularity in such a short time.
- Users can stake their ICP tokens either on the exchange of their choice or on the Network Nervous System App. Both of these are quite convenient, although the former is a more preferred option.
Staking Internet Computer Cons:
- Although the token price is expected to increase over time, it’s important to know that the crypto market is quite volatile and therefore the token price, and the APYs are prone to change.
- Locking period to obtain the highest staking rewards
- Valuation of ICP tokens have significantly declined in the bear market
Is It Safe To Stake Internet Computer?
It is widely accepted that staking cryptocurrencies carry risks that are common to ICP as well. Here are a few things you should know about.
- APYs prone to change: APYs on most cryptocurrencies are bound to change. On Binance, for example, ICP offered an APY of more than 25% for 120 days when it was launched, while today it offers an APY of 21.90% for the same locking period. These changes can hamper investment strategies if the market conditions witness rapid changes.
- Vulnerability to Attacks: Crypto wallets aren’t unfamiliar with cyber attacks and scams. Investors who aren’t aware of such happening may become a target of such attacks and lose their money.
- Volatile Value: Even though the ICP tokens are staked, the value of the staked tokens still changes depending on the market conditions. Because of this, in the case of a bear market, the person may lose all of their money when staking.
Frequently Asked Questions
Can I stake ICP?
Yes, it is possible to stake ICP tokens. Since they follow a consensus mechanism similar to proof-of-stake, investors can stake their crypto after they’ve purchased it from a crypto exchange.
What is the best place to stake ICP?
There are a few places that allow ICP staking, but so far, Binance offers the most returns. Upon locking the ICP tokens for 120 days, an estimated APR of 21.90% can be obtained. At the same time, staking ICP tokens on the official NNS app for 8 years can net a similar reward.
At the time of writing, ICP is the 11th highest staked token based on its 1.9 billion market cap with nearly 75% of tokens in circulation being staked. This is for good reason as it's a long-term project with the potential to disrupt the internet. While the token is not the most popular crypto for staking and lacks the supported wallets and exchanges as others, it's still a viable project that can be staked on Binance, Biture and its native wallet to earn decent rewards.