How to Earn KAVA Staking Rewards
A major spotlight has been set on Proof of Stake (POS) tokens such as Tezos (XTZ), Cosmos (ATOM), and KAVA. Earning interest on your crypto assets however isn’t always straight forward.
One trend we are seeing in this area is exchanges, including the majors like Coinbase, Binance, Huobi Global, and Kraken now offering staking to their users.
While exchanges offering staking is an excellent service to their users, it comes with its own opportunities and costs relative to other options. This guide explains the benefits and costs between exchanges, wallets, and other staking solutions for KAVA users.
Exchanges
For holders of the KAVA token, one option to earn staking rewards is by depositing your tokens at a staking service that supports KAVA. Staking services like exchanges offer KAVA staking rewards to their users, often without having to manage delegations or rewards. You simply deposit your coins and start receiving rewards. These services are fully custodial, so it’s important to be careful about which services you use and evaluate what’s best for your situation.
Benefits
- Expected payout: 50–100% of rewards. Varies widely by exchange.
- Pooled staking assets means you may be able to withdraw rewards sooner.
Costs
- Percentage of staking rewards that exchange keeps is not always clearly communicated.
- Forfeit voting rights.
- Centralized. Custodial risk.
Links
Wallets
Another option for earning KAVA staking rewards is delegating. Delegating is when you bond your tokens to a validator and earn rewards from that validator. Delegating is non-custodial, which means that a validator cannot steal your coins just because you delegated to them. However, there are a few risks to be aware of when delegating.
The first risk is called slashing, which are in-protocol penalties for validator misbehavior. The two types of misbehavior are liveness (going offline for too long) and double signing (equivocating about the state of the blockchain).
- Liveness has penalty of 0.05% which is relatively small.
- Double signing has a penalty of 5.0% which is considerably larger.
When you bond your tokens to a validator your tokens can be slashed.
The second risk is liquidity. When you bond your tokens, they remain in a bonded state for 21 additional days after you unbond them. So, if you bond your tokens and then want to transact with them, you need to plan ahead.
Benefits
- Expected payout: 80–100% of rewards.
- It is clear what percentage of staking rewards wallets keep.
- No custodian risk.
Costs
- 21-day unbonding period on your staked assets.
Links
Do it Yourself
You can also run your own staking node and earn KAVA rewards directly from the protocol. Staking of KAVA is done by validators which are nodes that validate the blockchain and receive inflationary block rewards in exchange. Anyone can run a validator node, but it does take technical expertise. The top 100 validators are eligible to receive staking rewards. You can see a list of active validators at kava.mintscan.io/validators.
Benefits
- Expected payout: 100% of rewards.
Costs
- 21-day unbonding period on your staked assets.
- Requires a hardware and management cost to running a validator
Links
This guide is meant to be a living document. If you think a wallet, exchange, or validator documentation should be added please reach out to hello@kava.io
