When you park your assets in the Coinbase Earn program, they call it staking, but it isn’t really.

It’s a process called indirect staking: when a third-party stakes cryptocurrency on your behalf and pays you back the rewards.

Any time you’re staking through an exchange, it’s indirect.

Direct staking is when you do it all yourself by opening a staking wallet, downloading the blockchain, running your own validator node, and receiving rewards. (Learn more about how staking works here.)

Take Cardano (ADA), for example.

You can “stake” ADA on Coinbase for a 3.75% APY return, but you aren’t really staking anything. Coinbase locks up your ADA, stakes it for you, then gives you a cut of the rewards. They’re just a middleman, and are charging you a fee for it, too.

Whereas on Daedalus, the Cardano-based that allows you to stake ADA directly, you can earn 5% APY in rewards. That’s more than a full point higher than you’ll earn from Coinbase, who is likely shaving profits from any rewards they earn on your behalf.

Some other reasons I prefer direct staking include:

1. Control: Direct staking gives you full control over your assets. You’re in charge of securing your assets and choosing a reputable staking pool. When you stake on an exchange, you’re trusting them to keep your assets safe for you.

2. Decentralization: Indirect staking contributes to the centralization of the network, as exchanges often hold large amounts of staked tokens. This gives them a disproportionate amount of power on the network, defeating the purpose of decentralization entirely. In contrast, direct staking allows for greater decentralization, as more individuals hold and validate transactions on the network.

3. Less exit risk: When you stake through an exchange, you may need help withdrawing your staked tokens, particularly if the exchange faces regulatory or financial issues. In contrast, when you stake directly, you have full control over your tokens and can withdraw them at any time.

If you have the option to stake an asset directly through a wallet, you should be doing that instead of using an exchange.

All three of these assets-Cosmos (ATOM), SingularityNET (AGIX), or Cardano (ADA)-can be staked somewhere better than Coinbase.

Here’s where you should park your cryptocurrency instead…

I prefer staking each of these three assets directly through their network wallets instead of using Coinbase Earn.

So, for Cosmos (ATOM), I use Cosmostation;

for SingularityNET (AGIX), I use MetaMask;

and for Cardano (ADA), I use Daedalus.

Direct staking is a longer process than using an exchange, but it’s worth the extra hassle to earn better rewards and keep your assets safe.

Digital Heavyweights can see where I’ve parked each of the 11 assets that I’m staking here.

Stay liquid,

Nick Black
Chief Crypto Strategist, American Institute for Crypto Investors


Notify of
1 Comment
Newest Most Voted
Inline Feedbacks
View all comments
Sick Rick
Sick Rick
1 month ago

Sick Nick with another hot trick…….. love your perspective and knowledge. It is priceless!!!!🙌👊🤙