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There are tons of staking platforms in the DeFi (decentralized finance) space, and participants nowadays are spoilt for choice when it comes to maximizing their gains.

Staking is increasingly becoming popular in the DeFi space as it not only helps token holders earn rewards on the tokens they own but also supports the platform’s security and helps achieve decentralization. The process involves locking up your digital tokens for a certain period to contribute to the overall performance and safety of the respective blockchain network.

The committed assets are used by validators on the blockchain to establish more authority on a Proof-of-Stake (PoS) blockchain. A PoS blockchain with more validators, therefore, achieves a greater degree of decentralization and strong backing that is resistant to attacks.

However, how do you pick a good staking validator to stake with? Well, in this guide, you will learn the dos and don’ts of picking a good staking validator.

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What is a Staking Validator?

The blockchain, whether in a Proof-of-Stake (PoS) or Proof-of-Work (PoW) network, needs to be updated and maintained by a decentralized group of nodes or computer servers distributed in disparate geographical locations.

These nodes or servers take on the responsibility of validating every transaction and updating the state of the blockchain. In a PoS blockchain, these nodes are aptly called validators and work collectively to ensure the blockchain’s security by guaranteeing availability, the accuracy of the distributed ledger, and the validity of each transaction.

Given that it is a PoS blockchain, many validators compete to publish the next block; however, winning validators are picked based on the number of tokens they have committed to the network as a guarantee of their availability.

For their commitment, and as an incentive for their continued participation, the validators are rewarded with block rewards which are mostly newly minted tokens on the network. Validators also receive staking fees paid by network users with each transaction.

Therefore just as miners on a PoW blockchain compete based on the capacity of their ASIC machines, PoW blockchains have validators competing based on the stake weight of the validator.

In addition to rewards, another incentive for good behavior is the penalties incurred by validators who violate the network’s rules. For instance, a validator that validates two blocks simultaneously will have their stake forfeited automatically in a process called “slashing”.

What's the Difference Between Delegating and Validating?

All PoS blockchains give token holders the right to validate and add blocks to the blockchain hence adding to the security and validity of the chain. However, with the high levels of competition, how can regular token holders earn rewards by staking their tokens? Well, this is where delegators come into the scene.

For token holders who do not want to be validators or are unable to act as validators due to the weight of their stake, they can delegate their tokens to a validator with more stake, thereby increasing that validator’s stake. In return, the token holder can have a part in the rewards earned by the validator. In this case, the token holder is a delegator.

Take note; however, that delegation does not involve sending your tokens to a validator’s wallet. A delegator can transfer the rights contained in their token without moving those tokens from one wallet to the other. The tokens can be held in a smart contract that allows a validator to use them while the delegator maintains ownership.

Thanks to the validator’s services, the delegator will earn a reward proportional to the ratio of their stake in contrast with the validator’s total stake. The validator will also charge an extra fee for allowing the delegator to join the pool.

What Are Good Qualities in a Validator?

When perusing a list of validators it can be difficult to figure out exactly where you should be staking your coins. There are, however, some qualities that you should consider when picking a validator:

High Uptime

Although PoS blockchains don’t require upfront input of sophisticated hardware, validators still require technical know-how to set up a validator node with limited disruption. The staking process, after all, requires nodes with 100% uptime to ensure improved staking returns. Pretty much all validators need industrial-grade internet.


A validators reliability correlates with their level of self-bonded ratio. A reliable validator has a high ratio as it shows how much they stand to lose.

Frequent Updates

A good quality validator should also keep their nodes updated to prevent any loopholes for an attack that could lead to a penalty on their stake. The best validators have a website or presence on social media to provide frequent updates to their delegators.

Low (But Not Zero) Fees

Finally, given that staking your tokens is all aimed at making gains, a validator who charges a high fee can limit the returns you receive as a delegator. Validators with low fees can help maximize returns.

One important caveat is that you should pick a validator with at least some fees. If you pick a validator with 0% fees then you are often ineligible for future airdrops. In addition validators advertising 0% fees are sometimes scammers (they will increase their fees exponentially in what amounts to a bait-and-switch).

Can You Stake with an Exchange?

Yes, you can stake your tokens with an exchange.

The advantage is that you don’t have to worry about key management or the staking process. However, given that the token’s private keys are stored on the exchange’s wallet, you will not be entitled to airdrops related to that project plus staking with centralized platforms is counterproductive to achieving decentralization.

Finally exchanges generally offer smaller APYs compared to standalone validators.

Why is it Better to Pick a Validator Not in the Top 10?

Validators in the top 10 list are mostly highly centralized, and even though they offer easy and fast services, contributing to their stake does not help achieve decentralization.

Choosing lower-ranked validators helps maintain the network’s degree of decentralization. Plus low ranked validators often receive airdrops to incentivize their continued participation.

What Happens if My Validator Gets Penalized?

When a validator is penalized, their stake or collateral is locked and can’t be moved for the locked period. Given that a penalty is imposed whenever there is malicious behavior, that penalty may vary. This will affect the overall profits made by that validator which will, in turn, affect the returns made through staking.

Keep in mind that generally any sort of validator penalty will only affect your rewards, not your principal staking amount. Your coins remain your coins, regardless.

How Long Does it Take to Stake with a validator?

Staking with a validator is straightforward and can start as soon as you commit your tokens with that validator.

Some cryptocurrencies have a “warm-up” or “cool-down” period where you aren’t earning rewards but that’s to be expected.

What Are the Biggest Validator Companies?

Some of the biggest validator companies include exchanges such as Binance and Coinbase. Among some companies that also act as protocol developers include Chorus One, Figment Network, and Cryptum Labs. You can also go for individual validator companies such as Chainflow or Everstake.

Keep in mind, that although the biggest validators offer unmatched reliability they don’t help with decentralization (they can potentially control too much of a network) and some cryptocurrencies de-incentivize delegators from staking with top 10 validators by denying them access to perks like airdrops. For some people that’s worth the knowledge their coins are locked up with massive staking operations but others would rather aid decentralization and gain access to airdrops.

Jinia Shawdagor

About the Author

Jinia Shawdagor

Jinia is a fintech writer based in Sweden focused on the cryptocurrency market and blockchain industry. With years of experience, she contributes to some of the most renowned crypto publications such as Cointelegraph, Invezz and others. She also has experience writing about the iGaming industry.

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