How to Stake Filecoin
Best Platforms to Stake FIL in 2023
Being a Filecoin Storage Provider requires dedication, time and effort. On top of purchasing hardware, running a full-stack datacenter, having technical expertise and sourcing clients to store data, Storage Providers must also pledge FIL as collateral to prove they will act in good faith and that their incentives are aligned with the rest of the Filecoin economy participants. The more storage capacity or data an SP plans to onboard to the Network, the more FIL is required by the protocol to secure that capacity or data. Ultimately, SPs are rewarded for their contributions of storing humanity’s most valuable information through the form of block rewards and storage contract deals
After its launch, FIL received its most significant milestone in 30 minutes by token sales of up to $200 million. This number distinctly shows that the future of stake Filecoin is more promising than anticipated.
What is Filecoin Staking?
Staking Filecoin involves placing your FC tokens on a platform, such as a crypto exchange, and leaving them there for a set period. This could be anywhere from several months to a year or longer. The longer you leave your coins on the staking platform, the more rewards you will earn in the form of FC tokens. By staking Filecoin, you are providing liquidity to traders on the respective platform to buy and sell this crypto.
Also, Filecoin miners participate in a type of staking of their own. This “staking” is an investment in the form of collateral provided by Filecoin miners (aka storage providers) to participate in the network. By having a “stake” in the storage network, miners are incentivized to see the network succeed.
Staking is miners’ commitment to keeping clients online by providing them with storage and ensuring the network runs smoothly. If the miners renege on their commitment, the network takes their staking collateral away. The amount Filecoin miners earn is commensurate with the storage they provide to clients.
Filecoin miners must commit 0.1901 FIL tokens as collateral or a stake for every 32 gibibytes of data that can be converted into storage. Filecoin miners earn 10 FIL per completed block on the blockchain, vested to them over six months.
How Filecoin Staking Differs From Other Blockchain Platforms
Filecoin staking is different from how you would stake any run-of-the-mill PoS coin. In fact, there is no room for yield farming or traditional staking. That’s because of how Filecoin operates under the hood and the consensus mechanism it uses.
Unlike other blockchains that operate on Proof of Work, the FIL chain platform is created on Proof of Replication (PoRep) and Proof of Spacetime (PoSt).In Proof of Replication, storage miners need to prove that they are storing the clients’ data physically, while Proof of Spacetime implies that they are still dedicating the space to keeping that same data equally for some time. High levels of integrity are observed as Filecoin makes the information and data challenging to undergo censorship.
Basically, Filecoin is an AirBNB-equivalent of digital storage. Using this protocol, you could “rent” the unused storage in your hard drive to store someone else’s files and earn filecoin (FIL) in return.
Clients place a storage order at a specific price in the storage market. Once a storage miner agrees to provide storage at that specific price while honoring the specific replication factor mentioned in the order, the client transfers the hashed data to the said miner.
The storage miner then places the files on their disk, which the Filecoin blockchain readily records. The miner then provides the client with a private key to their files. Generally, a client’s files are stored by several miners to ensure the optimum level of data security.
Miners also need to make a deposit in the system that they could lose if they are unable to confirm the data storage for whatsoever reason.
And when the client decides to retrieve the data, they can place a new order in the Retrievable Market. Once they reach an agreement with the receiving miner, the miner will provide them with the data for free.
Staking The Filecoin FIL can give you from 10.34% Annual Percentage Rate (APR). You can use Binance or Crypto.com to buy and stake your FIL coins.
Staking 100 FIL for 360 days would return ten additional coins to your account.
For the ideal strategy, since the coin might increase its value in a couple of years for long-term holders, at current market prices, staking 100 FIL would return 172$.
Filecoin Mining VS Staking
As one of the most profitable mining coins, Filecoin is a well-known open-source, a cryptocurrency designed to be a blockchain-based digital storage & data retrieval service. It is combined with IPFS, a peer-to-peer distributed network protocol, to make a more efficient and secure web.
Right now, profitability from mining FIL comes from a high inflation rate. 99.8% of storage capacity is not in use, and is not generating revenue from contracts.
The inflation rate decreases somewhat rapidly over time, with 50% of the FIL supply being available in 4 years.
That’s a target of 1 billion coins in circulation, vs the current amount of just under 70m coins.
So, 930m coins will be minted over the next four years, and the remaining 50% will take another ~70 years to mint.
That means mining FIL right now is the most profitable it will ever be, and it will continue to decrease in rewards over time.
The risk is just too significant for hobbyists.
Nodes, well-referred to as retrieval miners, are always competing and dedicated to being on service to clients with data and information as fast as possible. They are then honored with FIL fees which promote a network of nodes aimed at replicating and preserving files.
The nodes are also in continuous and stiff competition to make contracts with clients to provide storage for them for a certain period. The client and the storage miner agree that the client’s data is held and sealed by the miner, creating a unique sector for those files. The miner gains rewards directly from the clients in the form of FIL as a fee for the agreement. Alternatively, miners can mine FIL blocks that are attributed to block rewards.
5 Best Platforms for Filecoin Staking
As previously stated, Filecoin doesn’t support yield farming or traditional staking. So if you are really interested in filecoin staking, you have to use a third-party DeFi platform that allows FIL staking with a good APY.
Filecoin tweet on wrapped FIL for Defi:
Using the bridge, FIL miners can borrow+convert renFIL to native FIL to run more Storage Miners. FIL holders can earn a return on their holdings by converting to renFIL and depositing into a lending protocol like AaveRedditor
Filet is a Filecoin mining power tokenization protocol that runs on the blockchain. It tokenizes Filecoin mining power and introduces it into the DeFi ecosystem to provide FIL holders with risk-free and high-growth FIL staking services, and the annualized FIL return is about 20%. It also has flexible staking service.
Filet is a Dapp deployed on the Filecoin (FVM), and BSC and is connected to the Filecoin main chain. The mining power and assets are completely open and transparent. Users’ assets are safe and free to trade, and the returns are high.
As of this writing, Filet is offering attractive APYs on FIL staking — 23% over 180 days and 30% over 360 days.
OKXBest for Beginners
OKX represents a centralized exchange with a plethora of trading tools. In addition to basic spot trading, it also offers built-in trading bots, derivatives, a copy-trading feature, and many more tools aiming to facilitate the process for traders.
For regulatory and compliance reasons, the platform is not available in the US. VPN and other IT hacks could be used to bypass this restriction, though.
As for its staking products, OKX doesn’t charge any commission fees which makes it a good option for making passive income via Filecoin staking.
BinanceBest for Choice of Cryptocurrencies
Binance is the world’s largest cryptocurrency trading platform by the size of the daily trading volume.
It also supports a few hundred digital assets. It also provides a huge selection of trading tools and indicators in an effort to satisfy the needs of the most experienced traders and investors. Along with having features for multi-factor authentication and thorough compliance checks, the platform adheres to high security standards.
A simple onboarding process is what makes it a good fit for beginners. You can purchase some of the most well-known cryptocurrencies, like BTC or USDT, from local cryptocurrency users using its peer-to-peer trading tool. Additionally, you can pay with fiat using a bank transfer, a card deposit, or any of the additional 100 options.
Staking for Filecoin is a feature of the Simple Earn products at Binance. More than 300 coins are available for staking in this section of the platform as of this writing.
Binance was offering APYs of 7.09% over 30 days, 8.49% over 60 days, and 17.25% over 90 days. However, the exchange seems to have temporarily suspended FIL staking.
YouHaodlerBest For High Security
YouHodler, a fintech platform that helps people access the benefits of the crypto economy, has announced their support for 10 new tokens, including Avalanche (AVAX), 1inch Network (1INCH), PancakeSwap (CAKE), Cosmos (ATOM), BitTorrent (BTT), Filecoin (FIL), NEAR Protocol (NEAR), Elrond (EGLD).
YouHodler provides a variety of ways to profit from digital assets, particularly with crypto savings accounts. Once the funds are deposited into the user’s crypto savings account, the first weekly payment period begins and at the end of each week, the earned amount is deposited directly into the user’s account. YouHodler provides estimated earnings for different time periods up to 12 months, thereby making it simple to calculate potential income and plan ahead.
As of this writing, Switzerland-based YouHodler is offering 3% on Filecoin staking. Duration is flexible.
How to Store Filecoin Safely?
When it comes to security, the safest way to keep your crypto is to buy a hardware staking wallet (usually a USB ledger) or use a software wallet (Either a browser extension or a mobile app). Crypto wallets hold your private keys (which are the passwords that gives access to your cryptocurrencies).
Benefits of Filecoin Staking
- It’s an easy way to earn interest in your cryptocurrency holdings.
- You don’t need any equipment for crypto staking like you would for crypto mining.
- You’re helping to maintain the security and efficiency of the blockchain.
- It’s more environmentally friendly than crypto mining.
Risks of Filecoin Staking
- Market risk – When staking cryptocurrencies, the biggest risk is the price movement of the asset we are doing. It would help if you were careful in choosing cryptocurrencies that are not scams, are not going away, or may lose all their value over time.
- Lack of liquidity – If we choose very small cryptocurrencies that we hardly see on exchanges, we will not find opportunities to buy to convert to fiat or other cryptocurrencies such as Bitcoin when they are sold. We need to ensure it is liquid, i.e., bought and sold in bulk on exchanges.
- Lockout period – Certain cryptocurrencies need to be blocked for some time when we cannot use them. Tron and Cosmos are examples of this. If an unforeseen event occurs and its price starts to fall during this period, we can only wait for the lock to end.
- When they pay the reward – The timing of paying out dividends varies by currency, and not everyone does this every day. This means that sometimes we will have to wait a while until we finally receive our reward. If we intend to invest long-term, performance is not something we worry about. However, this affects our ability to reinvest our earnings and get a return on them.
- Validator Risk – Maintaining a validator node involves technical knowledge and the risk of compromising its proper functioning. These must work 100% of the time if we want to maximize profits. If something happens and our node goes down, we could be penalized, significantly affecting the number of dividends we get. In some extreme cases, we might lose all of our equity cryptocurrency.
Validation costs – Charges are incurred when you run one of these nodes or authorize a third party. You have to have a team running all the time, which costs money and power. If you choose a third party, this will be reflected in the commission you have to pay.
- Lost or Stolen – Finally, we always have the risk of losing our wallets’ private keys or having funds stolen. This can happen if we don’t take security measures seriously enough. Whether we are staking or hodling, we must always have a backup copy of the wallet and keep the private key safe, so we do not lose our funds.
The problem here is complicated because if we choose the exchange, the risk falls on it.
How Much Can You Make Staking Filecoin?
As you stake Filecoin, your potential rewards may change in size over time. The number of validators who contribute their resources to the network at any given time is the primary factor on which the reward is based.
So, when Filecoin staking began in March 2023, the rewards were quite high. A 30% annual percentage yield was available on some platforms. The rewards did, however, diminish over time as the general level of interest did.
At the time of writing, the annual percentage rate on the amount of FIL at risk ranges from 1% to 9.8%.
Filecoin Staking Tax
You can anticipate that you will have to pay taxes on your Filecoin staking earnings, though the exact requirements will depend on the country in which you reside.
- According to the most recent regulations in the United Kingdom, investors should report any earnings from staking in the decentralized finance (DeFi) market, where staking Filecoin is grouped, as miscellaneous income. Based on the exchange rate at the time you received the funds, the value of your cryptocurrency holdings is determined.
- If you keep the cryptocurrency assets for at least a year, you can defer paying income taxes on your staking earnings in Germany.
- With regard to its advice on staking earnings, the US IRS hasn’t been very specific. Tax experts advise investors to treat their staking earnings as income based on the value of the cryptocurrency when it is received in order to be on the safe side. As a result, depending on the increase or decrease in the value of Filecoin since you first made them, you’ll need to assess whether you made a capital gain or loss when you decide to sell the cryptocurrency you earned from staking.
Consult a tax expert for the most recent laws in your jurisdiction, as regulators frequently update their tax advice as the cryptocurrency industry develops.
Why Do People Like Staking Filecoin?
People like staking Filecoin because it offers potentially generous interest rates on platforms like Binance Earn, Crypto.com, or BakerySwap. Investors holding their FIL coins can put these funds to work for them and generate passive income around the clock. Also, Filecoin is a high-profile project that integrates with major proof-of-stake blockchain Ethereum.
The interest rates for staking Filecoin are attractive to investors, sometimes running into the triple-digit percentage range. Investors know that if they are willing to stake their tokens for a year or longer, they will generate more coins that could potentially rise in value as the Filecoin ecosystem continues to grow. Filecoin is among the leaders in decentralized storage, which gives investors confidence that they are participating in a project that plans to be around for the long haul.
There are many great platforms to earn interest with your Filecoin. Some exchanges are beginner-friendly and often provide higher interest rates compared to their competitors, and have a much more comprehensive selection of cryptocurrencies to earn interest on. If you own FIL, consider checking the Earn section on Gemini to see if you can earn interest on them too.
Earn FIL Staking Rewards by Staking File Coin on Gemini, one of the safest ways to stake Filecoin. Visit Filecoin Price Prediction to learn the price movements of the FIL crypto. You may check the coins here for more staking options for different cryptocurrencies.
Can You Stake Filecoin?
Filecoin stakes are possible. In the context of Filecoin, staking entails keeping FIL tokens in a wallet and participating in the network as a storage provider or verifier in order to contribute to network security and receive rewards for your work. Having a stake in FIL tokens also entitles you to vote on proposals to update and enhance the Filecoin protocol, giving you a voice in network governance.
How Do I Become a Filecoin Storage Provider?
Follow these steps to begin your storage provider journey:
- Know the economics of Filecoin.
- Plan your business.
- Verify that you possess the necessary abilities.
- Create the appropriate infrastructure.
Is Staking of Filecoin Profitable?
Earning rewards for taking part in the network as a storage provider or verifier can make staking in Filecoin profitable. Your ability to receive rewards will be influenced by a number of variables, such as the network’s current storage demand, the quantity of FIL you are staking, and the network’s overall stability and security.
Staking does involve some risk, it’s important to keep that in mind. Since the value of cryptocurrencies, including FIL, can fluctuate greatly, staking is not always guaranteed to be profitable. Investigate the network in-depth, comprehend the risks, and decide for yourself if it’s the best investment before you start staking in Filecoin.