Staking cryptocurrencies allows token holders to earn recurring rewards for supporting blockchain networks. Artificial intelligence chatbot ChatGPT recently named its top 3 digital assets for staking — Ethereum, Tezos, and Cardano.
ChatGPT highlighted these major proof-of-stake coins when asked by American Money to recommend cryptocurrencies to stake for passive income. The AI cited the staking rewards and governance participation possible with each protocol.
Staking has become an appealing option for crypto investors to generate yield on holdings during the bear market. Networks reward stakers with newly minted tokens for validating transactions and securing the blockchain.
How Staking Crypto Assets Works
Staking involves locking up tokens to activate validator status on proof-of-stake blockchains. Ethereum made the transition from proof-of-work to proof-of-stake consensus in September 2022 with the long-awaited Merge upgrade.
Validators run nodes that verify each block and transaction on the network. In exchange, they earn a percentage yield on their staked crypto.
The rewards come from transaction fees and inflationary token issuance. Staking provides liquidity essential for transaction processing and security. Crypto prices fluctuate, so staking can hedge against volatility.
Ethereum Offers Over 3% Yields for Validators
ChatGPT singled out Ethereum as a top staking option given its dominance as the second-largest blockchain. Ethereum rewards currently hover above 3% annually for validators staking 32 ETH or joining pools.
Over 22% of Ethereum’s circulating supply is now staked just months after the Merge activated staking. That represents over $44 billion locked in Ethereum 2.0 contract addresses. Staked Ether and rewards cannot be withdrawn until after future network upgrades.
The shift to proof-of-stake was a monumental move to boost Ethereum’s scalability, security, and sustainability. Staking lets holders participate directly in governance decisions for the decentralized finance leader.
Tezos Rewards Stakers Close to 5% Yearly
The AI chatbot also promoted Tezos and its POS blockchain that offers around 5% APY staking yields at the time of writing. Tezos brands itself as an “evolving blockchain” with on-chain governance allowing XTZ holders to vote on upgrades and proposals.
Over 70% of Tezos’ total token supply is staked, showing strong engagement by the community. Tezos launched in 2018 with proof-of-stake validators from the genesis block unlike Ethereum’s lengthy transition.
Regular upgrades decided by XTZ holders help keep Tezos competitive. The recent Hangzhou upgrade reduced gas fees and added features that may support mainstream adoption.
Cardano Staking Offers Just Under 3% Returns
Lastly, ChatGPT recommended the Cardano blockchain and its ADA cryptocurrency for passive income through staking. Cardano currently provides around 3% APY staking rewards with over 60% of ADA supply locked on the network.
The blockchain founded by Ethereum co-founder Charles Hoskinson uses proof-of-stake for energy efficiency like Tezos. Cardano staking allows holders to earn ADA and participate in governance according to their stake.
Development activity on Cardano has ramped up significantly in 2022 with hundreds of projects launching on the network. DeFi and NFTs on Cardano are helping drive adoption and transactions that compensate stakers.
Factors to Consider When Staking Cryptocurrencies
While staking can generate yields exceeding traditional interest accounts, investors should weigh risks and tradeoffs. Locked staking periods, early withdrawal penalties, and slashing penalties for downtime are common.
Tax obligations on staking rewards should be evaluated as well. Some protocols have lengthy vesting periods restricting access to earned tokens. Changes to tokenomics can impact staking yields over time.
Validators joining staking pools vs. running their own node involves different costs, yields, and responsibilities. Hardware and IT needs for operating nodes add expenses but maximize control.
Overall, staking enables cryptocurrencies holders to put their assets to work while securing next-generation networks. The rewards provide lucrative recurring payouts far above keeping tokens idle in a wallet.
Crypto Staking Poised for Growth in 2023 and Beyond
According to StakingRewards, the total value staked across all crypto networks surpassed $350 billion in 2022, doubling from $175 billion the prior year.
As digital asset adoption increases, staking activity is projected to grow further. More protocols plan to transition to POS given its energy efficiency benefits.
Ethereum is expected to lead staking growth as its ecosystem continues migrating to the upgraded proof-of-stake network. Rewards should increase after withdrawals get enabled post-Shanghai.
Meanwhile, layer 2 scaling solutions and sidechains are also introducing staking opportunities tied to Ethereum. ChatGPT’s top staking picks of Ethereum, Tezos, and Cardano appear well-positioned to capitalize on the burgeoning crypto staking megatrend.
Evaluate Staking Reward Rates and Program Details
With staking going mainstream, investors have more options to generate yields on their cryptocurrency holdings. But passively collecting rewards is not without risks or responsibilities.
When staking, be sure to evaluate projected reward rates after accounting for token inflation, withdrawal waiting periods, and other fine print conditions. Compare staking programs across different platforms as terms vary.
Use staking calculators to model yields based on your specific investment timeframe and token amount. Weigh locking up assets versus maintaining liquidity for trading or investing opportunities.
Stay updated on protocol changes that could impact reward rates, withdrawal policies, and staking dynamics. Follow networks’ governance forums to get the latest from key stakeholders.
According to artificial intelligence bot ChatGPT, Ethereum, Tezos and Cardano rank among the most attractive cryptocurrencies for staking to earn passive income. Staking offers attractive recurring payouts on holdings but requires extensive research.
Consider staking a portion of your crypto portfolio to put assets to work while hedging against volatility. Monitor reward rates, governance changes, and new staking protocols arriving across DeFi and Web3.
With sound due diligence, staking rewards can become a lucrative engine for compounding crypto wealth over the long-term. The staking arena continues evolving quickly, so stay informed to maximize earning potential on your digital assets.
For regular coverage of crypto staking opportunities and trends, bookmark Opportuneist.com. Our team publishes in-depth guides and analysis on maximizing staking yields. Subscribe for the latest updates.