If you own some Zilliqa (ZIL), you could add a steady stream of passive income by staking the asset. Zilliqa staking is a practical way for you to contribute to the ZIlliqa network’s security and stability in exchange for returns on your staked investments. This guide will walk you through how to get started with staking ZIL, so you are well-prepared to make the most of the Zilliqa ecosystem.
Methodology
We explored multiple options over several months to identify the top platforms for buying and staking Zilliqa (ZIL). Our selection criteria focused on the core elements that make the staking experience reliable and efficient. Our evaluation was largely based on key metrics such as security, fees, liquidity, ease of use, and compliance. Here’s a quick look at the reasons why we chose the following platforms:
Binance
Binance is renowned in the crypto space for its robust security measures and high liquidity. The platform ensures your transactions are secure with features like cold storage options, two-factor authentication (2FA), and encrypted data storage. Binance is user-friendly, catering to both new and seasoned traders, and offers competitive staking rewards.
OKX
OKX stands out for its comprehensive suite of investment products that cater to various experience levels and risk tolerances. The platform offers competitive Annual Percentage Yields (APY) on cryptocurrencies and a robust “Earn” section where users can select from a range of options. OKX uses industry-standard encryption, cold storage solutions, and multi-factor authentication to ensure transaction security and protect user accounts.
CEX.IO
CEX.IO is a strong choice for buying and staking Zilliqa thanks to its straightforward and user-friendly platform. It offers competitive staking rewards and integrates seamlessly with a range of financial services, making it easy to manage your crypto portfolio. CEX.IO also stands out for its regulatory compliance and a decent customer support infrastructure, which ensures a secure and reliable staking experience.
Bybit
Bybit is known for its high liquidity and efficient trading environment. The platform provides a seamless staking experience with competitive rewards and low fees. Bybit prioritizes security with measures like cold storage for digital assets, multi-factor authentication, and anti-phishing protocols to protect user accounts.
Atomic Wallet
Atomic Wallet makes staking Zilliqa (ZIL) easy and secure right from your own wallet. It’s decentralized, which means you keep full control of your private keys and funds. The wallet’s user-friendly interface simplifies the staking process, making it great even for beginners. Plus, it supports a wide range of cryptocurrencies, so you can easily diversify your investments. With features like encrypted private keys and backup options, Atomic Wallet ensures your assets are well-protected while you stake.
For further information and insights into our verification methodologies, click this link.
Where to buy Zilliqa (ZIL)
OKX
- What is the Zilliqa (ZIL) blockchain?
- How to stake Zilliqa
- Benefits of Zilliqa staking
- Risks of Zilliqa staking
- Tips for safe and effective Zilliqa staking
- Zilliqa staking rewards
- Best platforms to stake ZIL in 2024
- Binance
- Atomic Wallet
- CEX.IO
- Is Zilliqa staking still worth it in 2024?
- Frequently asked questions
What is the Zilliqa (ZIL) blockchain?
As a blockchain platform, Zilliqa (ZIL) promises to be all about high performance and security. It was created to tackle the pestering issue of scalability that many other blockchains face. A team of researchers and developers from the National University of Singapore launched Zilliqa in 2017 to enable innovative applications that need a lot of transactions and data.
Key components of Zilliqa
Here’s a quick rundown of the under-the-hood components that power the Zilliqa blockchain and the surrounding ecosystem:
Sharding technology:
Zilliqa uses sharding, which breaks the network into smaller groups of nodes called shards. Each shard processes transactions at the same time, which ultimately boosts the network’s overall speed. More nodes mean a higher number of transactions per second.
With sharding, each node has less work to do, making the whole system run faster and more efficiently. The more shards there are, the more transactions the network can handle.
The sharded architecture is ideal for running large-scale computations that can be easily parallelized. Examples include simple computations such as search, sort, and linear algebra computations, to more complex computations such as training a neural net, data mining, financial modeling, scientific computing and in general any MapReduce task among others
— Zilliqa whitepaper
Consensus mechanism
Zilliqa combines Practical Byzantine Fault Tolerance (PBFT) with proof-of-work (PoW). PoW helps establish node identities and prevent fake nodes, while PBFT ensures transactions are confirmed by the majority of nodes in a shard. This mix enhances security and efficiency.
PBFT ensures that once a transaction is confirmed, it’s final and can not be changed. This guarantees the integrity of the blockchain.
Smart contracts
Zilliqa created Scilla (Smart Contract Intermediate-Level Language), a functional programming language designed for safety. Scilla helps avoid common smart contract bugs and makes them more secure.
Scilla also supports formal verification, which allows developers to prove that their smart contracts work correctly. This reduces the risk of bugs and vulnerabilities in the code.
Decentralized applications (DApps)
Zilliqa supports a growing range of Dapps, from finance (DeFi) to gaming and digital advertising. Its high speed and low fees make it an attractive platform for developers.
Zilliqa has also set up something called Zilliqa Capital to drive innovation. This fund supports projects and startups that build products/services on the Zilliqa blockchain.
Use cases and applications
- Decentralized finance (DeFi): Zilliqa’s speed and low fees make it perfect for DeFi apps. Projects like ZilSwap, a decentralized exchange (DEX), use Zilliqa for efficient and cost-effective trading.
- Digital advertising: Backed by partners like Aqilliz, Zilliqa aims to improve digital advertising by making ad verification transparent while reducing fraud.
- Gaming: Zilliqa’s scalability benefits gaming apps that need fast and secure transactions. Games like Battlemechs are already using Zilliqa for their blockchain-based gaming.
- NFTs: Zilliqa supports non-fungible tokens (NFTs), allowing artists to mint, trade, and showcase their digital assets on a secure blockchain.
Governance and community
- Decentralized governance: Zilliqa involves the community in its governance model. With Zilliqa Improvement Proposals (ZIPs), the community can propose and vote on network changes.
- Zilliqa staking: Zilliqa offers staking, where ZIL holders can participate in network security and governance while earning rewards. This helps improve security and decentralization of the network.
To sum it up, Zilliqa is a growing ecosystem that promises cross-chain compatibility, better privacy features, and improved sharding technology. It aims to establish itself as a top platform for next-gen decentralized applications by addressing scalability and security issues.
How to stake Zilliqa
Staking Zilliqa is straightforward if you are familiar with the basics of cryptocurrencies and staking. There are a couple of ways you can go about it:
- Staking via a wallet (direct staking)
- Staking via an exchange
Staking via a wallet
Here’s a step-by-step guide on how to get started with ZIL.staking:
Step 1: Get a ZIL wallet
First, you need a wallet that supports Zilliqa staking. Some popular options include Zillet, Moonlet, and Atomic Wallet. Download and set up one of these wallets if you don’t have one already. You will also want to make sure to secure your wallet with a strong password and back up your recovery phrases.
Step 2: Purchase ZIL tokens
At the risk of stating the obvious, if you don’t have any ZIL tokens yet, you’ll need to buy some in order to stake. We have already outlined some of the best exchanges where you can buy ZIL earlier in this guide.
Step 3: Choose a staking provider
Next, you need to choose a staking provider. This could be a staking pool or a validator. Ideally, you should research different providers to find one that suits your needs. Look for providers with good reputations, high uptime, and favorable reward rates. Some popular options are Binance, Zillacracy, and CEX.IO, among others.
Step 4: Delegate your ZIL tokens
Open your wallet and find the staking section. Select your chosen staking provider from the list of available options. Enter the amount of ZIL you want to stake and confirm the transaction. Your ZIL will be delegated to the staking provider, and you’ll start earning rewards.
Note that it’s important to keep a tab on your staking status and rewards after delegating your ZIL. Most wallets and staking platforms provide dashboards where you can track your earnings and the performance of your chosen validator.
Staking via a centralized exchange
This is the easier choice between the two options — here’s how you do it. Note that we are using Binance for this demonstration, but you can use any other exchange of your choice.
Staking Zilliqa on Binance:
Step 1: Create a Binance account
Create a Binance account if you don’t already have one. You will have to undergo the mandatory KYC process before being able to access Binance’s staking services.
Step 2: Deposit ZIL tokens
You have to purchase or deposit some ZIL tokens in your Binance account assuming you don’t already have some. You can either buy ZIL directly on Binance using fiat or other cryptocurrencies or transfer ZIL from an external wallet.
If you are buying, then simply go to the “Buy Crypto” section, select ZIL from the options, and choose your preferred method (credit card, bank transfer, etc.). If you want to deposit ZIL from an external wallet, then go to the “Wallet” section and click on “Fiat and Spot,” search for ZIL and click on “Deposit.” After that, copy your ZIL deposit address and use it to transfer ZIL from your external wallet to your Binance account.
Step 3: Find ZIL staking
Once you have ZIL in your Binance account, go to the “Earn” section on the Binance homepage. From the dropdown menu, select “Staking.” You’ll see a list of available staking products in the staking section. Look for ZIL in the list. You can also use the search bar to quickly find Zilliqa staking options.
Step 4: Choose a staking product
Depending on when (or where) you are reading this, Binance may offer different ZIL staking products with varying durations and reward rates. Review the available options and choose the one that suits your preferences. Longer staking periods usually offer higher rewards, but they may lock your assets for the entire duration.
Step 5: Stake Your ZIL
Click on the “Stake” button next to the ZIL staking product you’ve chosen. Enter the amount of ZIL you want to stake and confirm the transaction. Your ZIL tokens will be locked for the duration of the staking period, and you’ll start earning rewards.
Which option is a better fit for you?
Staking Zilliqa directly through a wallet gives you more control and could earn you higher rewards, but it’s a little more hands-on since you have to manage your own private keys. It becomes a lot easier and more convenient if you go through an exchange like Binance because it handles all the technical elements and security. On the flip side, you might get slightly lower rewards.
Therefore, the bottom-line is, if you like having full control, go for direct staking. But if you prefer something straightforward, staking through an exchange is a great option.
Benefits of Zilliqa staking
Zilliqa staking lets ZIL holders take part in the network while earning rewards. Here’s a closer look at what you get and what to watch out for with ZIL staking.
- You earn rewards: When you stake ZIL, you get rewards in the form of more ZIL tokens. It’s a nice way to grow your holdings over time without having to buy more tokens.
- You support the network: Staking helps keep the Zilliqa network secure. By staking your tokens, you’re helping to validate transactions and keep the network running smoothly. This makes the blockchain more decentralized and secure.
- Participation in governance: Staking your ZIL tokens can give you a say in network decisions. You might get to vote on important proposals, which gives you a voice in shaping the future of Zilliqa.
- Passive income: Staking ZIL can be a way to earn passive income. Just by holding and staking your ZIL tokens, you earn rewards over time, which is great for long-term holders.
Risks of Zilliqa staking
The crypto market is still highly volatile. Consequently, staking ZIL, while potentially rewarding, also comes with its share of risks.
- Market volatility: The value of ZIL can go up and down a lot. If the price drops while your tokens are staked, the value of your holdings and earned rewards can significantly decrease. However, this is a risk with all cryptocurrencies, not just Zilliqa. Check our detailed Zilliqa price prediction for an insight into the asset’s short-, mid-, and long-term prospects.
- Lock-up periods: Depending on the platform you choose, staking ZIL may require your tokens to be locked up for a while. During this time, you can’t sell or move your staked tokens, which can be a drawback if you need quick access to your funds.
- Technical risks: There are risks linked to the staking process itself. If there are bugs or vulnerabilities in the staking mechanism or the platform you’re using, your staked tokens could be at risk.
- Network risks: The overall health and success of the Zilliqa network are crucial. If the network faces technical issues, attacks, or loses user interest, the value and benefits of staking could go down.
- Slashing risks: Some staking protocols have slashing mechanisms. It means a portion of your staked tokens can be taken away as a penalty for network misconduct (e.g., double-signing or downtime). Understanding these rules is crucial.
Tips for safe and effective Zilliqa staking
So, now that you are aware of some of the potential risks associated with Zilliqa staking, here are a few quick tips to avoid common staking mistakes and steer clear of any danger:
Do your research
- Get to know how Zilliqa staking works, including the process and potential rewards.
- Keep up with the latest news and updates from the Zilliqa team.
Choose a reputable staking platform
- Stick to well-reviewed and trusted staking platforms or wallets.
- Steer clear of platforms with bad security records or unclear terms.
Understand the risks
- Remember that the value of ZIL can go up and down significantly. Be prepared for occasional wild swings.
- Learn about the lock-up period and make sure you won’t need those tokens right away.
Diversify your investments
- Don’t put all your eggs in one basket. Spread your investments to manage risk.
- Consider staking only a part of your ZIL stash to keep some liquidity.
Stay updated
- Keep an eye on Zilliqa network updates, governance proposals, and community news.
- Join community discussions to learn from others and stay informed.
Use strong security practices
- Turn on two-factor authentication (2FA) for your staking platform or wallet.
- Keep your private keys and recovery phrases safe, and never share them.
Monitor your staking
- Regularly check on your staked tokens and rewards.
- Watch out for any unusual activity in your account.
Be prepared for slashing
- Learn about the slashing conditions and how to avoid them.
- Choose validators with a good track record to reduce slashing risks.
Plan for taxes
- Understand the tax implications of staking rewards in your country.
- Keep detailed records of your staking transactions for tax reporting.
Engage with the community
- Join Zilliqa’s community forums and social media groups.
- Share your experiences and pick up tips from other stakers.
Zilliqa staking rewards
Here’s a quick look at when you will get your rewards and what to keep in mind about taxes:
Reward calculation
The main thing to know about earning rewards is that it depends on how much ZIL you stake. Put simply, the more ZIL you stake, the more rewards you can get. This is because the rewards are divided up based on how much each person has staked. So, if you stake a lot, you get a bigger slice of the pie.
Keep in mind that validators that perform well and have high uptime usually provide more consistent rewards. It’s a good idea to pick a validator with a strong track record to maximize your earnings. Staking platforms usually provide an estimated Annual Percentage Yield (APY), showing the annual return you can expect. This percentage can change based on network conditions and the factors mentioned above.
Frequency of payouts
The frequency of your staking payouts can vary depending on the staking platform and the network’s rules. Some platforms offer daily payouts, which means you get a portion of your rewards every day. This can be great if you like to see regular, small amounts of ZIL coming in.
Meanwhile, other platforms might offer weekly payouts. In this case, your rewards accumulate over a week and are then distributed. This approach balances frequent payouts with manageable transaction processing for the network. It’s important to check with your staking platform to see when and how you’ll get your rewards.
Tax considerations
The way staking rewards are taxed can vary a lot depending on where you live. In many places, staking rewards are seen as taxable income when you receive them. This means you might need to report the value of the ZIL tokens you earn as income on the day you get them.
If you decide to sell your staked ZIL tokens later, you might have to pay capital gains tax. This tax depends on how much the value has changed from when you received the rewards to when you sell them. To keep everything in line, it’s important to track all your staking transactions, noting down the dates and values of your rewards.
You could also consider consulting with a tax professional who knows the ins and outs of cryptocurrency taxes in your area to be on the safer side with the tax authorities. They can provide specific advice and help you follow local tax laws, ensuring you correctly report your staking income and any gains or losses.
Keen to learn more about crypto tax? Check our ultimate U.S. crypto tax guide for 2024, or our U.K. tax guide for those residing in Britain.
Best platforms to stake ZIL in 2024
Binance
Binance offers a user-friendly platform for staking ZIL, making it suitable for beginners. It provides flexible staking options (locked or flexible terms) and benefits from high liquidity for buying and selling ZIL. However, Binance offers lower staking rewards compared to some dedicated staking platforms, and it functions as a custodial service, meaning the platform holds your ZIL.
- User-friendly platform, easy to set up for beginners
- Flexible staking options (locked or flexible terms)
- High liquidity for buying/selling ZIL
- Secure and reputable exchange
- Lower staking rewards compared to dedicated platforms
- Custodial service (Binance holds your ZIL)
Atomic Wallet
Atomic Wallet is a non-custodial wallet that allows you to stake ZIL directly within its mobile or desktop app. This grants you control over your private keys. It also boasts a user-friendly interface and supports various cryptocurrencies. Additionally, staking returns on Atomic Wallet are usually on the (relatively) higher side. However, some technical knowledge is necessary for managing your own wallet.
- Non-custodial wallet (you control your ZIL keys)
- Secure mobile and desktop app for staking on the go
- User-friendly interface
- Supports various cryptocurrencies
- APY on the relatively higher side
- Requires some technical knowledge for managing your wallet. So, less ideal for absolute beginners.
CEX.IO
CEX.io is a well-established exchange offering competitive ZIL staking rewards. It prioritizes security and transparency. The platform supports multiple cryptocurrencies and offers good customer service. However, CEX.io has a slightly more complex user interface compared to beginner-friendly platforms, and just like Binance, it requires account verification (KYC). The APY, on the other hand, is on the higher side.
- Competitive ZIL staking rewards
- Transparent and secure platform
- Supports multiple cryptocurrencies
- Good customer service
- Slightly more complex user interface
- Custodial service (CEX.io holds your ZIL)
Is Zilliqa staking still worth it in 2024?
Staking your ZIL can be a great way to generate passive income. Zilliqa offers a secure and reliable mechanism for staking, even though the returns might be marginally lower than some other high-paying options. However, what Zilliqa lacks in headline rates, it makes up for in relative stability and future potential of the Zilliqa ecosystem.
That said, remember that staking any crypto — not just ZIL — comes with certain inherent risks. For instance, the value of your ZIL can fluctuate wildly with the market, so it’s important to stay informed and consider these factors before you give a shot at Zilliqua staking.
Frequently asked questions
Can I stake Zilliqa?
How do I start staking Zilliqa?
Is staking Zilliqa secure?
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